What are Trade Promotions?

TRADE PROMOTIONS.

Ans.    Sales promotions can also be directed at members of the trade – wholesalers, distributors, and retailers. It is intended to stimulate demand in the short run and help push the product through the distribution channel more immediately. Effective trade promotions can generate enthusiasm for a product and contribute to the loyalty distributors show for the brand.

With the massive proliferation of new brands and brand extensions, manufacturers need to stimulate enthusiasm and loyalty among members of the trade and also need a way to get the attention of the buyers suffering from information overload.

Objectives for promotions in the trade market :

Generally speaking, when marketers devise incentives for the trade market, they are executing a push strategy – i.e. sales promotions directed at the trade help push a product into the distribution channel until it ultimately reaches the consumer.

—       Obtain initial distribution :  Because of the proliferation of brands in the consumer market, there is fierce competition for shelf space. Sales promotion incentives can help a firm gain initial distribution and shelf placement. Like consumers, members of the trade need a “reason to choose” one brand over the other when it comes to allocating shelf space. A well conceived promotion incentive might sway them.

—       Increase order size : One of the struggles in the channel of distribution is over the location of inventory. Manufacturers prefer that members of the trade maintain large inventories so that the manufacturer can reduce inventory carrying cost. Conversely, members of the trade would rather make frequent, small orders and carry little inventory. Sales promotions techniques can encourage wholesalers and retailers to order in large quantities, thus shifting the inventory burden to the channel.

—       Encourage co-operation with consumer market sales promotions : It does a manufacturer no good to initiate a sales promotion in the consumer market if there is little co-operation in the channel. Wholesalers may need to maintain larger inventories and retailers may need to provide special displays or handling during consumer market sales promotions. To achieve synergy, marketers often run trade promotions simultaneously with consumer promotions.

—    Increased store traffic : Retailers can increase store traffic through sales promotions or events. A promotion that generates a lot of interest within a target audience can drive consumers to retail outlets.