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Belch: Advertising and
Promotion, Sixth Edition
V. Developing the
Integrated Marketing
Communications Program
• Product or Program Sales
Awards are tied to the selling of a product, for example:
Selling a specified number of cases
Selling a specified number of units
Selling a specified number of promotional programs
• New Account Placements
Awards are tied to:
The number of new accounts opened
The number of new accounts ordering a minimum number of cases or units
Promotional programs placed in new accounts
• Merchandising Efforts
Awards are tied to:
Establishing promotional programs (such as theme programs)
Placing display racks, counter displays, and the like
16. Sales Promotion © The McGraw−Hill
Companies, 2003
test or receive incentives offered by the manufacturer. Nor do they want their people
becoming too aggressive in pushing products that serve their own interests instead of
the product or model that is best for the customer.
Many retailers refuse to let their employees participate in manufacturer-sponsored
contests or to accept incentive payments. Retailers that do allow them often have strict
guidelines and require management approval of the program.
Trade Allowances Probably the most common trade promotion is some form
of trade allowance, a discount or deal offered to retailers or wholesalers to encourage
them to stock, promote, or display the manufacturer’s products. Types of allowances
offered to retailers include buying allowances, promotional or display allowances, and
slotting allowances.
Buying Allowances A buying allowance is a deal or discount offered to resellers in
the form of a price reduction on merchandise ordered during a fixed period. These discounts
are often in the form of an off-invoice allowance, which means a certain percase
amount or percentage is deducted from the invoice. A buying allowance can also
take the form of free goods; the reseller gets extra cases with the purchase of specific
amounts (for example, 1 free case with every 10 cases purchased).
Buying allowances are used for several reasons. They are easy to implement and
are well accepted, and sometimes expected, by the trade. They are also an effective
way to encourage resellers to buy the manufacturer’s product, since they will want to
take advantage of the discounts being offered during the allowance period. Manufacturers
offer trade discounts expecting wholesalers and retailers to pass the price reduction
through to consumers, resulting in greater sales. However, as discussed shortly,
this is often not the case.
Promotional Allowances Manufacturers often give retailers allowances or discounts
for performing certain promotional or merchandising activities in support of
their brands. These merchandising allowances can be given for providing special displays
away from the product’s regular shelf position, running in-store promotional
programs, or including the product in an ad. The manufacturer generally has guidelines
or a contract specifying the activity to be performed to qualify for the promotional
allowance. The allowance is usually a fixed amount per case or a percentage
deduction from the list price for merchandise ordered during the promotional period.
Slotting Allowances In recent years, retailers have been demanding a special
allowance for agreeing to handle a new product. Slotting allowances, also called
Figure 16-6 Three forms
of promotion targeted to
reseller salespeople
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Chapter Sixteen Sales Promotion