Sales promotion refers to temporary incentives offered by an organization to either their customers or their resellers, with the intention of increasing the sales of their products. Therefore, it is necessary to classify sales promotions into two broad categories – sales promotions aimed at consumers and sales promotions aimed at distribution channels (which is more commonly referred to as trade promotion).
Sales promotions that are aimed at resellers with the intention of persuading resellers to stock a desired amount of the manufacturer’s products are known as trade promotions.
Main Types of Trade Promotion
Trade Allowances
A trade allowance is when manufactures give retailers an allowance or a refund on their products. In exchange the retailer agrees to promote the manufacturer’s products within their stores. This is sometimes referred to as a slotting allowance if the brand is granted special in-store placement (e.g. a high traffic shelf position.)
Cooperative advertising
Cooperative advertising simply refers to an agreement between manufacturers and resellers to share the advertising cost for the manufacturer’s brands. This is often seen is a catalog produced by a retailer that is highlighting brands for sale within the store.
Dealer Listings
Dealer listings refer to when manufacturers include details of retailers that carry their products in their advertisements – such as “available at Wal-Mart.”
Gifts and Premium money
Gifts and premium money refer to gifts such as free products or monetary rewards which are given to resellers by manufacturers if they resellers are successful in purchasing and or reselling a particular volume of a product. It is similar to a bonus or a commission being paid to a salesperson.
Point-of-purchase (POP) display material
Brands will often provide point-of-purchase display material – usually known as POP – such as posters, signage, videos, portable shelving, and so on.
