Page 168 - DMGT507_SALES AND PROMOTIONS MANAGEMENT

Sales and Promotions Management

Notes Slotting Allowances (also called stocking, or introductory allowance): This is the money paid
to retailers to stock new products. William L. Wilkie, Debra M. Desrochers, and Gregory T.
Gundlach found that retailers justify this by pointing out the costs they incur by stocking so
many new products every year and to cover risks associated with new products. Many firms are
uncomfortable with this type of allowance.
Buy-Back Allowance: Producers sometime offer retailers the opportunity to re-stock. This
promotion immediately follows another type of deal and offers incentives for new purchases.
After the first promotion if the inventory levels with retailers are very low or almost depleted,
producers may offer this second incentive to build inventory level to normal with retailers.

Advertising Allowances: The manufacturer pays the dealer or retailer a certain amount of agreed
upon money to advertise the producer's product. This amount can be a fixed rupee amount or a
percentage of gross purchase during a specified time period.
Display Allowance: This is a direct payment of money or free goods to the retailer for each item
purchased if the party agrees to set up a POP display, or running in-store promotional programme
as specified by the marketer. The marketer requires the retailer to sign an agreement specifying
the activity to be performed before the allowance is given.

Contests and Incentives: Manufacturers sometimes use trade contests and special incentives to
stimulate greater support and selling effort from dealers and salespeople and achieve sales
targets, and other objectives. The prizes might include items such as TV, stereo, and trip to exotic
places etc. Sometimes these contests and incentives are offered to sales people of the distributors,
dealers, wholesalers, or retailers. These rewards involve cash payment to sales people to specially
sell the producer's product. This type of cash payment is called push money or SPIFF.
Cooperative Advertising: The manufacturer agrees to share a certain amount of media costs
with the dealer for advertising his products. This deal is usually based on product quantity
purchased. The dealer must show proof that the ads were released then only the payment is
made. Most of these ads appear in newspapers.
Dealer Loader: A dealer loader is a premium that a marketer gives to retailers for buying a
specified quantity of a product. A dealer loader may be a premium to retailers for just buying
the specified product quantity or the condition may be to display it for the duration of promotion
and afterwards the item is given to retailers as premium.
Training Programme: Manufacturers impart training about their own brands to the sales staff of
wholesaler or retailer at their (wholesaler's or retailer's) location. Michele Marchetti and Andy
Cohen reported that Microsoft launched a training programme "Helping Clients Succeed" aimed
at value-added resellers. The three-day workshop was designed to help resellers, better
understand Microsoft Software.

9.2 Internet Promotions

The number of companies using Internet promotions is increasing. Contests and sweepstakes
are among the most commonly used to motivate people to visit marketers' Internet sites. America
Online frequently conducts prize promotions to attract users to its advertisers' areas. The prizes
may range between substantial sums of money to daily prizes including merchandise decorated
with the online service's logo.

Example: In India, some popular Internet promotion sites are Hungama.com and Contest
to win where companies such as Pepsi, Cadbury, Sony, and Levis frequently run online contests
and offer exciting prizes.

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