Most of the products come to the market through a distribution channel comprising of wholesalers and retailers. Dealers or distributors are the front runners and the growth of any company largely depends on its channel network. The prime objective of Trade Promotion is to push the product through marketing intermediaries.
In any sales promotion scheme, it is very important to decide the period for which it can run in line with the profitability and selling behavior of the people.
In this competitive age without the support of wholesaler and retailers, no manufacturer can survive. By offering incentives to middleman manufacturers may derive many benefits.
Retailers can help in clearing the inventory level and may provide self space to attract customers towards the products.
Companies are offering several kinds of incentive schemes to motivate their dealers to fight competition and pursue them to the increased sales in spite of all odds to promotion efforts of the firm.
Middleman Sales Promotion Techniques
Following are the Middleman sales promotion techniques are as under:
1. Special Discounts
In this method, the manufacturer provides a discount facility to retailers and wholesalers on their purchase.
This may act as a good incentive to purchase more and more quantities. The discount is provided on the basis of the amount of purchase by the wholesaler or retailer.
As the amount of purchase is increasing the rate of discount increases.
Related: 15 Main Advantages and Disadvantages of Sales Promotion (Explained).
2. Sales Assistance
Under these methods, manufacturers provide assistance to the dealers so that they maintain the cordial relation with them.
The sales assistance may be in many forms like helping them in making sales strategies or training the middleman’s salesman.
Sales assistance also includes delivery facility, credit facility, and storage facility.
3. Trade Allowances
In this method, allowances are offered to wholesalers and retailers for purchasing or promoting specific products.
It is simply a discount for the purchase of the promoted product during the specified period. The allowance is tied with the purchase of a certain minimum quantity of the product.
This trade incentive is often used to gain more distribution or maintain the existing one. These allowances are over and done the normal allowance.
This scheme helps in shifting the retailers. Many retailers pass this allowances to customers and succeed in clearing the inventory.
Many manufacturers insist on proof of purchase.
Related: Top 5 Important Determinants of Promotion Mix (Explained).
4. Point of Purchase (POP) Advertising
It includes a display or other promotion located near the site of the actual buying decision.
In expenses incurred by retailers on Windows dressing and other layouts, our Borne by manufacturers.
This helps in attracting the customers to the point of purchase.
5. Trade Shows
In this scheme vendors displays. These trade shows are goods organized by industry trade associations, perhaps as part of these association’s annual meetings or conventions.
Manufacturers have the opportunity to display new products.
6. Dealer Contest and Training Programmes
These are run by the manufacturers to induce retailers and their salespeople to increase sales and to promote the product.
Dealer contest help to clear stocks and transfer the benefits of bulk purchasing to the customers, manufacturers have the specialist staff which can train the Salesforce of the middleman.
Related: 15 Factors that Affecting Market Segmentation.
7. Free Goods
It is in the form of an extra quantity of purchased product, “free“. There may or may not be any limit on the quantity of purchase during the promotion period.
Free goods encourage resellers to stock more during the promotion period.
The offer also looks more attractive to resellers if the product is a fast-moving item.
The value of the offer is more to the retailer than the price to the reseller. This scheme is not suitable for slow-moving items or goods.
Related: 13 Social and Cultural Values Affect Business Environment.
8. Cash Rebate
It is an incentive that gives retail salespeople cash rewards for every unit of a product they sell. It is a monetary reward given to the Salesforce of the dealers to sell a manufacturers product.
This is a form of delayed value promotion for resellers. The manufacturer offers a rebate on the purchase of a certain quantity.
Once the retailer has met the conditions, the rebate is given to the retailer.
This motivates the retailer to order for purchase of certain quantity.
The retailer may be required to arrange a product display in a prominent show window or offer a discount to consumers.
9. Advertising Allowance
Advertising and display allowances are primarily used for consumer products.
To earn the advertising allowance, usually, the retailer is required to advertise the product offer and promote the product.
In the case of display, the promotion is confined within the retail store. Some manufacturers provide the space in their National or regional advertisements to list all the dealers from where the consumers can buy the product.
These allowances are used priority for consumer goods.
Related: 21 Main Features of Marketing (Explained).
10. BuyBack Allowance
BuyBack allowance is used to encourage restocking by retailers.
When the manufacturer realizes that after the initial deal inventory levels at the retail are quite low this offer helps in building the inventory level with retailers to normal.
Retailers like it because they build up their stocks at a reduced price without offering any promotion to consumers.
Some times the manufacturer specifies the minimum amount for buyback allowance.
11. Count and Recount Allowance
It is an offer of money to resellers for each unit of promoted product sold out during a specified period of time.
Count and recount allowance is used to ensure the resellers are not out stock.
This exercise involves a great deal of time and efforts.
Related: Top 10 Functions for Establishing A New Business Unit (Step by Step).
12. Forward Dating
The manufacturer provides the facility to retailers to purchase a certain quantity of the product in the specified period but the building is done after a period of time.
The retailer purchased the product at reduced prices during the Promotion Period, however, the goods are shipped at later date.
The retailers may be offered a discount on purchases exceeding a certain quantity or amount.
It helps manufacturers to save warehousing costs by shifting the goods to retailers shop.
13. Slotting Allowance
It is fees that manufacture pay retailers to make available the space on the shelf for their new product.
Fees charged may vary depending on the importance, images, and size of the store.
Thus, you know the all most Middleman Sales Promotion Techniques.
Leave a Reply