Trade Promotion Techniques

Trade Promotion Techniques

Companies may offer a wide variety of trade promotions to wholesalers, retailers, their own sales teams, and other stakeholder groups with a vested interest in selling or reselling products or services. Among the most common are trade shows, sales contests, trade allowances, training, product demonstrations, free merchandise and push money.

One of the most common types of sales promotions, particularly in in B2B markets, are trade shows. A trade show is an event in which firms in a particular industry display and demonstrate their offerings to the organizations and people they hope will buy them. Trade shows may be organized to focus on particular product categories, industries, geography, buyer roles, and other criteria. Typically an organization has many different options for trade show participation.

Consumer Electronics Show, 2012

Sales contests, which are often held by manufacturers and B2B companies, provide incentives for salespeople to increase their sales. Often, the contests focus on selling higher-profit or slow-moving products. The sales representative with the most sales of the product wins a prize such as a free vacation, company recognition, money, or some other performance bonus.

Trade allowances give channel partners—for example, a manufacturer’s wholesalers, distributors, retailers, etc.—different incentives to push a product to its customers. One type of trade allowance is an advertising allowance (money) to advertise a seller’s products in local newspapers. An advertising allowance benefits both the manufacturer and the retailer. Typically, the retailer can get a lower rate than manufacturers on advertising in local outlets, which saves the manufacturer money. The retailer benefits by getting an allowance from the manufacturer.

Another sales promotion tool that manufacturers offer businesses is training to help their salespeople understand how the manufacturers’ products work and how consumers can be enticed to buy them. Many manufacturers also provide in-store product demonstrations to show a channel partner’s customers how products work and answer any questions they might have. Demonstrations of new video-game systems and computers are extremely popular and successful in generating sales.

Free merchandise, such as a tool, television, or other product produced by the manufacturer, can also be used to induce retailers to sell products to consumers. For example, a television manufacturer might offer the manager of a retail electronics store a television to push its products. If a certain number of televisions is sold, the manager gets the television.

Have you ever been to an electronics store or a furniture store and felt like the salesperson was pushing one particular television or one particular mattress? Perhaps the salesperson was getting push money—a cash incentive from the manufacturer to push a particular item. Manufacturers may encounter several reasons to offer push money to increase product sales: perhaps there is a large amount of inventory, it is being replaced by a new model, or the product is not selling well.

Which Sales Promotions Work Best, and When?

The table, below, summarizes the different types of sales promotions designed for both consumers and businesses. Although different types of sales promotions work best for different organizations, rebates are very profitable for companies because, as you have learned, many consumers forget to send in their rebate forms. In a weak economy, consumers tend to use more coupons, but they also buy more store brands. Coupons available online or at the point of purchase are being used more often by consumers. Trade shows can be very successful, although the companies that participate in them need to follow-up on the leads generated at the shows.