m

1. 10-1
Trade Promotions
Chapter Overview
Discussion Slide
10
• Nature of trade promotions
• Types of trade promotions
• Objectives of trade
promotions
• Concerns in using trade
promotions
Prof. ( Dr.) Kao Kveng Hong, PhD., D.LittProf. ( Dr.) Kao Kveng Hong, PhD., D.Litt

2. 10-2
Trade Promotions
• Expenditures or incentives used by
manufacturers and channel members to push
goods through the channel.
• 7% to 10% of sales revenue goes for trade
promotions.
• Approximately 50% of total promotional
dollars spent.
• To be effective, must be integral part of IMC
program.

3. 10-3
Marketing Budgets
Trade Promotions
50%
Consumer Promotions
24%
Advertising
26%

4. 10-4
• Trade allowances
• Trade contests
• Trade incentives
• Training programs
• Vendor support programs
• Trade shows
• Specialty advertising
• Point-of-purchase displays
F I G U R E 10 . 2
Trade Promotional Tools

5. 10-5
• Off-invoice allowance: a per-case rebate
paid to retailers for an order.
• Drop-ship allowance: money paid to
retailers who bypass wholesalers or brokers
for pre-planned orders.
• Slotting fees: money paid to retailers to
stock a new product.
• Exit fees: money paid to retailers to remove
an item from their SKU inventory.
F I G U R E 1 0 . 3
Trade Allowances

6. 10-6
Disadvantages of Trade Allowances
• Failure to pass allowances on to retail
customers.
• Forward buying.
• Diversion.

7. 10-7
Trade Contests
• Used to achieve sales targets.
• Funds known as “spiff money.”
• Rewards can be prizes or cash.
• Can be designed for various channel
members.
• Some organizations do not allow trade
contests because of possible conflict of
interests.

8. 10-8
• Cooperative merchandising agreement
(CMA)
• Corporate sales program (CSP)
• Producing plant allowance (PPA)
• Back haul allowance (BHA)
• Cross-dock or Pedal runs
• Premium or bonus pack
F I G U R E 1 0 . 4
Trade Incentives

9. 10-9
Training Programs
• Manufacturer provides training to
wholesalers’ or retailers’ salespeople.

10. 10-10
Vendor Support Programs
• Billback programs
• Co-op advertising programs

11. 10-11
• Dairy Queen and Oreo cookies
• Ace Hardware and Tru-Test Products
• Intel and IBM
• Toshiba and HP
• Motorola and Skytel
• J.C. Penney and Reebok
• Sprint and Radio Shack
• Radisson Hotels and TGI Fridays
F I G U R E 1 0 . 5
Cooperative Advertising

12. 10-12
Trade Shows
• Ranks 3rd
in B-to-B marketing expenditures.
• Manufacturers spend $70,000-$100,000 per show.
• Retailers spend $600 per attendee.
• Average trade show had 701 exhibiting firms and 13,431
attendees.
• Average ratio of attendees to exhibitors was 19 to 1.
• Largest trade shows are:
• International CES
• The Super Show
• Miami International Boat Show & Strictly Sail
• International Housewares Show
• Mid-America Trucking Show

13. 10-13
Trade Shows by Industry
Manufacturing (18.6%)
Computer (4.6%)
Consumer (11.0%)
Education (4.6%)
Communications (5.3%)
Retail/Distributors (15.8%)
Food (7.0%)
Engineering (7.7%)
General Business (8.3%)
Medical (10.3%)
Source: Danica Vasos, “Industry Profile,”Source: Danica Vasos, “Industry Profile,” ExpoExpo, January 2000, pp. 52-55, January 2000, pp. 52-55

14. 10-14
Source: Alf Nucifora, "Simple Coffee Cups Packs Advertising Punch,"
Long Island Business News, (Jan. 22, 1999), Vol. 46, No. 4, p. 7C.
26
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F I G U R E 1 0 . 7
Top Categories in Advertising SpecialtiesTop Categories in Advertising Specialties

15. 10-15
• Integrate the brand’s image into the display.
• Integrate the display with current advertising and
promotions.
• Make the display dramatic to get attention.
• Keep the color of the display down so the product
and signage stand out.
• Make the display versatile so it can be easily adapted
by retailers.
• Make the display re-usable and easy to assemble.
• Make the display easy to stock.
• Customize the display to fit the retailer’s store.
F I G U R E 1 0 . 9
Effective POP Displays

16. 10-16
Source: "Pop Peeves," Marketing Tools, (June 1997), p. 10.
3
6
11
17
19
24
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F I G U R E 1 0 . 2
Top Weaknesses of Manufacturer-Supplied POP Displays

17. 10-17
INTEGRATED LEARNING EXPERIENCESTOP
• Access the following firms that produce POP displays.
• Melrose Displays: Http://www.melrosedisplays.com
• Visy Displays: Http://www.visydisplays.com
• Display Design & Sales: Http://www.displays4pop.com
• Acrylic Designs: Http://www.acrylicdesigns.com
• Which firm’s Web site is the most attractive?
• Which site is the most informative?
• Which firm would be the best from the standpoint of the:
• Manufacturer?
• Retailer?

18. 10-18
• Obtain initial distribution.
• Obtain prime retail location or shelf space.
• Maintain support for established brands.
• Counter competitive activities.
• Increase order size.
• Build retail inventories.
• Reduce excess inventories.
• Enhance channel relationships.
• Enhance the IMC program.
F I G U R E 1 0 . 1 0
Objectives of Trade Promotions

19. 10-19
INTEGRATED LEARNING EXPERIENCESTOP
• What appears to be each agency’s
strengths? Weaknesses?
• Examine the trade promotion objectives
presented in the chapter. Which agency
would be the best for each objective?
Co-op Communications: Http://www.coopcom.com
TradeOne Marketing: Http://www.tradeonemktg.com
Sable Advertising: Http://www.sableadvertising.com

20. 10-20
Concerns about Trade Promotions
• High cost
• Tend to be used outside of IMC Plan
• Over-reliance on trade promotions to
push merchandise
• Often used for short-term sales goals
• Potential erosion of brand image
• Impact on small manufacturers

21. 10-21
• Decide on the objectives of the trade promotions.
• Develop trade promotions for
• Wholesalers or distributors
• Retailers
• Decide on which trade shows to attend.
• What type of POP display is necessary and how will
retailers be encouraged to use it?
• Decide on a co-op advertising program.
Building Your IMC Campaign