Manufacturer / Wholesaler Promotions
Promotions are not a “retail only” endeavor. Many promotional methods coincide with national advertising campaigns. This generates support and enhances the effectiveness of these campaigns. There are 3 common promotional methods
Trade allowances push products down the distribution channel by providing discounts or other reimbursements to retailers that promote certain items.
For example, Campbell’s might offer retailers $5.00 for every case of New Spicy Beef Stew they buy.
Or, Campbell’s may offer a free case of Clam Chowder for every 4 cases of Spicy Chicken Noodle purchased.
Manufacturers generally offer a variety of incentives to salespeople in exchange for promoting their product over the competition.
For example, even though The Sharper Image stocked a variety of bookshelf stereo systems with multi-CD changers, Sony offered a spiff of $10.00 per unit sold.
This is when a manufacturer and a retailer split the cost of advertising.
For example, Stroud’s Home Furnishings may split the cost of an ad with La-Z-Boy, as long as a La-Z-Boy product is prominent in the ad.
The percentages split between the two companies will usually depend on the coverage allotted to the product. The more print space, airtime or promotional materials allotted, the more the manufacturer may be willing to pay.