Trade vs. Consumer Promotions
Trade promotions are targeted toward retailers while consumer promotions are targeted toward consumers.
LEARNING OBJECTIVES
Differentiate between trade and consumer promotions relative to a product’s marketing mix
KEY TAKEAWAYS
Key Points
- The purpose of trade promotions is to help companies differentiate a product, increase product visibility, and increase the product purchase rate.
- The purpose of consumer promotions is to increase brand awareness and market acceptance.
- There are various types of trade and consumer promotions.
- Consumer promotion activities include rebates, coupons, premiums, contests, kids eat free programs,reward programs, and free samples.
Key Terms
- differentiate: To show, or be the distinction between two things.
- trade: Those engaged in an industry or group of related industries.
- Federal Trade Commission: an independent agency of the United States government that seeks to promote consumer protection and the eliminate and prevent anti-competitive business practices, such as coercive monopoly
- brand awareness: Brand awareness is the extent to which a brand is recognized by potential customers and is correctly associated with a particular product.
Trade versus Consumer Promotions
Trade promotions are targeted toward retailers while consumer promotions are targeted toward consumers.
Promotions: A point of purchase or end cap display can make consumers aware of new products.
Trade Promotions
Trade promotions are marketing activities executed between manufacturers and retailers. Trade promotions help companies differentiate a product, increase product visibility, and increase the product purchase rate. But while there are multiple products on the market, retailers only have a finite space to display items on their shelves. It is therefore sometimes necessary to encourage retailers to stock your item instead of your competitor ‘s item.
To this point, trade promotions include:
- Trade allowances are incentives used to encourage a retailer to stock a product such as cash discounts or promotional incentives.
- Dealer loaders are incentives given to a dealer to display a product, such as in-store displays, premiums, or rebates.
- Trade contests are used to encourage retailers to sell products, as the retailer who sells the most wins a prize.
- Point of purchase display (POP) is an end cap or center store display where retailers can show the products to customers to increase awareness.
- Training programs teach employees or retailers the benefits and uses of a product.
- Push money is an extra commission paid to encourage the stocking and selling of a product.
Consumer Promotions
Consumer promotions are marketing activities targeted at the consumer to encourage them to buy the product. These are often used at the product launch to increase brand awareness, market acceptance, and sales. Types of consumer promotions can include:
- Price deals are temporary reductions in price, such as 50% off an item.
- Discounts are reductions to a basic price of goods or services.
- Reward programs allow consumers to collect points, miles, or credits for purchases, which they can later redeem for rewards.
- Coupons have become a standard mechanism for sales promotions.
- With rebates, consumers are offered money back if the receipt and barcode are mailed to the producer.
- Some contests or sweepstakes automatically enter the consumer into the event through the purchase of the product.
- Free samples are when a product is given to the consumer so that he or she may try a product before committing to a purchase.
- Discounts are sometimes given to customers who buy in large quantities.
- Kids eat free promotions offer a discount on the total dining bill by offering one free kid’s meal with each regular meal purchased.
- Premiums are promotional items that can be received for a small fee when redeeming the proof of purchase.
Companies will often use a combination of trade and consumer promotions when launching a new product.