Sales & Marketing Management

Here are some things to be aware of and examples of typical conditions of these
programs:

1. The cost of national advertising comes out of the cost of the product to the
   business.
   That is why suppliers sometimes impose minimum levels of purchases for
   their customers or, alternatively, different levels of pricing for different
   classes of customers.


2. Some suppliers can require mandatory participation in national advertising
   programs as part of the dealer agreement.
   Some small businesses may find that it is financially difficult to maintain
   participation in these programs.
   It may even be that the national promotion pricing is so low that it is
   literally a loss leader intended to bring customers in the door.


3. Many suppliers offer co-operative advertising programs.

These programs are to help a business financially to support and participate

in the national advertising programs. Usually, these programs are called

50/50 Co-op Ad programs.

This means that the supplier will match the dollars spent by the business on

advertising of the supplier's products up to a specified maximum amount

that is usually a percentage of annual purchases.

It is common for suppliers to provide 2%, 3%, or even 6% of annual purchases
in Co-op advertising support.

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If purchases of the product annually were $50,000 and the 50/50
Co-op advertising allowance was 3%, then the supplier would pay $1,500 of
advertising cost if the business spent $1,500.
Suppliers usually pay this in the form of a credit on an account after receiving
proof of the advertising.