Marketing Communications

388 CHAPTER 12 BRAND ACTIVATION

Trade promotions

Diff erent promotion tools can be used to motivate the trade. Th ey are summarised in

Table 12.3.^22 Off-invoice allowances are direct price reductions to the trade during a limited

period of time. Th ey are the simplest form of trade promotions. Th e trade may receive a discount

per unit purchased or a discount aft er selling a certain volume of the product. Discounts may

also be given aft er a longer period of time, when a certain volume of sales has been reached

(discount overriders). Also, the count–recount method is retrospective in that the stock of

the manufacturer’s brand is counted at the beginning and at the end of a period, and a discount,

for instance per case sold, is given. A slotting allowance is a one-time, up front fee that is

charged by retailers before they allow a new product on their shelves to cover the start-up

costs of entering a new product into their system. Manufacturers oft en contest these allow-

ances because they feel that they are subsidising the retailer’s business. Advertising/perfor-

mance allowances are monetary incentives aimed at encouraging the retailer to advertise the

manufacturer’s brand and are provided when proof of the ad is produced. In fact, the manu-

facturer pays part of the advertising campaign of the retailer. In some cases, a percentage of

everything the retailer buys from a manufacturer is put into a co-operative advertising f u n d.

Table 12.3 Trade promotion tools

z Off-invoice allowances

• Individual case bonus – Count and recount


• Volume allowance – Free merchandise


• Discount overriders
  z Slotting allowances
  z Advertising/performance allowances
  z Co-operative advertising allowances
  z Buy-back allowances
  z Dealer contests
  z Dealer loaders

Table 12.2 Objectives, advantages and disadvantages of consumer promotions

A B C D E F G H I J

Promotion objectives

Generate trial + ++ ++ −− −− ++ −− −− −− −−

Induce repeat purchase + + ++ ++ −− −− −− −− ++

Basket-filling ++ + + + −− −− +

(Dis)advantages

Direct consumer benefit ++ ++ −− −− −− + ++ −− ++ −−

Ease of obtaining benefit ++ + −− −− − ++ ++ −− ++ −−

Impact on brand image and brand loyalty −− − ++ − + +

Manufacturer’s workload and problems ++ + − + −− − − −− − −−

Impact on consumer’s price perception −− − + −− + − +

Ease of targeting −− ++ ++ ++ + −− ++ − −−

Ease of budget planning −− −− −− − + ++ ++ ++ ++ −

Database support −− −− ++ ++ ++ −− −− ++ −− ++

Immediate increase in sales ++ + − ++ +

Impact on store image and store loyalty − ++ −− +

Retailer’s workload ++ − + − − − −− −

++ very positive + positive − negative −− very negative

A price cut on shelf C cash refunds E contests, sweepstakes and lotteries G extra volume I premiums

B coupons D savings cards F sampling H free in-mail J self-liquidators

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