MBA Trade Promotion Very Sample Practice Set in English
MBA Trade Promotion Short Sample Practice Set in English
Trade promotion, its nature, Types and Objectives, Consumer Promotion: Coupons, Premiums, Contests and Sweepstakes, Refunds and Rebates, Sampling, Bonus packs and Price offs.
SHORT ANSWER QUESTIONS
Q.1. What is sales promotion? Discuss its types.
Ans. Sales Promotion: Sales promotion is a type of pull marketing technique. If there is a product which is new in the market or which is not receiving a lot of attention, the product can be promoted via sales promotions. It uses various techniques like discounts on the product, free schemes, etc. When a brand wants to increase the sales of its products, it uses sales promotion. The brand can increase the sales by attracting new customers to their products or by retaining the old customers by various means.
Types of Sales Promotions: There are two types of sales promotions: Trade Promotions:
- Trade Promotions: If the promotional activities are focused on dealers, “we promotional activities are focused on dealers, distributors or agents here is a lot of competition in any field. And in channel sales, to the products moving and to motivate the dealer to perform better, trade discounts are given.
- Consumer Promotions: Any promotion activity that we do keeping the end consumer allied consumer promotion. For example, if an e-commerce website gives 10% Wets then it wants the consumers to make the best of this deal. This is a motional activity and hence can be called as consumer promotions.
Qus.2. Discuss trade promotions with its goals.
Ans Trade Promotions: Offering various incentives to the distribution chime various incentives to the distribution channel in the form of promotions.
A trade promotion is targeted at resellers, i.e. wholesalers and retailers, who manufacturers products to the ultimate consumers. The objectives of sales promotions all trade are different from those directed at consumers. In general, trade sales promotions hope to accomplish four goals:
- Develop in Store merchandising support, as strong support at the retail store level is the key to closing the loop between the customer and the sale.
- Control inventory by increasing or depleting inventory levels, thus helping to eliminate
seasonal peaks and valleys.
- Expand or improve distribution by opening up new sales areas (trade promotions are also sometimes used to distribute a new size of the product).
- Generate excitement about the product among those responsible for selling it.
Qus.3. What is the basis of consideration in trade promotion?
Or Discuss about the nature of trade promotion.
Ans. Basis of Consideration/Nature of Trade Promotion: The basis of consideration in trade promotion is:
- The capabilities of the parties are to be taken account of. The retailers are poor in administration of complete schemes, whereas the wholesalers are poor at generating the
primary demand. The sponsors, therefore, should carry-out these tasks.
- The terms/schemes should discourage unscrupulous trade practices on the part of trade.
- Scheme should be properly communicated. Results expected must be clearly stated.
- Regular supplies of products/gifts during the pendency of the scheme has to be considered.
- Booking of shelf-space of prominent dealers must be done sufficiently in advance.
- The gifts should be of good quality and useful.
- Sales Contests/Display Contests:
(a) Proper selection of dealers.
(b) Assistance to these dealers.
(c) Communication of the team of judges and criteria of judging.
(d) Prizes and consolation prizes.
(e) Target assigned must be in relation to trading area potential.
- POP (Point of Purchase) material and its display need supervision. Only 15 per cent POP trial that is supplied is displayed and that too for half of its useful life.
- Retailers who launch their own scheme can be persuaded to provide a special support to the company’s products.
- MRTP provisions must be respected. The discount period should not be less than aboriginal price and the bargain price must be stated. The quality must be specified
maximum and minimum discount must be stated.
Qus.4. Mention the various objectives of trade promotions in detail.
Ans. Objectives of Trade Promotions: Trade promotions include smart ways to push more product to the distribution channel. The more the motivation of distribution channel, the mo channel will push to the end customer.
The various objectives of trade promotions are:
- Achieve Widespread Distribution: The first objective of trade promotion is to increase distribution level of a company. A company can achieve widespread distribution by using various try promotion strategies. This is important for start-ups which are not recognized but which wan establish themselves in the market:
- Move Excess Stock Forward: Many products are known to be seasonal in nature. In non-seas most companies offer incentives to their channel dealers or to their sales executive to achieve beta sales figures. The advantage of offering these incentives is that the channel dealer will push the product in the market. The company achieves more sales by pushing more stock in the market.
- Increase Display Levels: One of the key aspects of products at the consumer level is the level of display we have in the market. The competition in the Smartphone market is so high that when a consumer needs a Smartphone, he will buy the brand which is immediately available. If the product from one brand is not available, he may buy another brand of the same specs.
- Increase Stock Holding in Market vs. Company Warehouse: Inventory lying in company ware-house is a huge cost to the company. It is an objective of trade promotion to push the product in the market and to end dealers instead of keeping the product in the company warehouse. This ensures greater stock holding in the market and creates more push in the market because of the availability of the product
- To Push More than Competitors: It is not necessary that a channel dealer will deal in only one brand. He can be a multiband dealer as well. So, one of the objective of trade promotion is to ensure that the dealer has ample stock and that he is pushing our product above competitors.
- Support Other Forms of Promotions: If we are running an advertisement and marketing campaign, we need to ensure that our dealer is also carrying ample stock. On the other hand, there are other trade promotions which can run down to the retailer level as well. The distributor needs to support the company in such forms of trade promotions to perform better and bring in more sales.
Qus.5. What are trade deals in trade promotions? Write its main types.
Ans. Trade Deals: Trade deals are special price concessions superseding, for a limited time, the normal purchasing discounts given to the trade. Trade deals include a group of tactics having a common theme—to encourage sellers to specially promote a product. The marketer might receive special displays, larger-than-usual orders, superior in-store locations or greater advertising effort. In exchange, the retailer might receive special allowances, discounts, goods or money. In many industries, trade deals are the primary expectation for retail support and the marketing funds spent in this area are considerable.
There are two main types of trade deals: buying allowances and advertising/display allowances.
- Buying Allowances: A buying allowance is a bonus paid by a manufacturer to a reseller when a certain amount of product is purchased during a specific time period. For example, a reseller who purchases at least 15 cases of product might receive a buying allowance of $6.00 off per case, while a purchase of at least 20 cases would result in $7.00 off per case and so forth. The payment may take the form of a check or a reduction in the face value of an invoice. In order to take advantage of a buying allowance, some retailers engage in ‘forward buying.’ In essence, they order more merchandise than is needed during the deal period, then store the extra then store the extra merchandise to sell later at regular prices. This times that the savings gained through the buying allowance is greater than the cost of ware reduces profit margins and tends to create co transporting the extra merchandise. Some marketers try to discourage forward buying, since it etnas to create cyclical peaks and troughs in demand for the product.
The slotting allowance is a controversial form of buying allowance. Slotting anon products will occupy. The controversy stems fro tailors charge manufacturers for each space or slots on the shelf or in the warehouse that new pie. The controversy stems from the fact that in many instances, this allowance mounts to little more than paying a bribe to the retailer to convince them to carry our company leers are willing to pay extra to bring their products to the attention of consumers who are pressed for time in the store. Slotting allowances sometimes buy marketers Printed nacres on retail shelves, at eye level or near the end of aisles.
The final type of buying allowance is a free goods allowance. In this case, the manufacturer certain amount of product to wholesalers or retailers at no cost if they purchase a stated amount of the me or a different product. The allowance takes the form of free merchandise rather than money
- Advertising Allowances: An advertising allowance is a dividend paid by a marketer to a caller for advertising their product. The money can only be used to purchase ad versus example, to print flyers or run ads in a local newspaper. But some resellers take advantage of the system, so many manufacturers require verification. A display allowance is the final form of trade promotional allowance. Some manufacturers pay retailers extra to highlight their display from the many available every week. The payment can take the form of cash or goods. Retailers must furnish written certification of compliance with the terms of the contract before they are paid. Retailers are most likely to select displays that yield high volume and are easy to assemble.
Qus.6. what are the advantages offered by trade promotions?
Ans. Advantages of Trade Promotions: Trade promotions are a targeted marketing effort by manufacturers to promote their products to the retailers and build/enhance relationships with them. Some of the trade promotion techniques include low pricing, cash discounts, trade contests, free point of purchase displays, deal loaders, gifts, etc.
Trade promotions offer the following advantages:
- Allow the Companies to Differentiate their Products from the Competition: Due to strong competition and a given number of retailers, a company has to work hard to promote their product and that is where a relationship with the retailer helps.
- Increased Product Visibility: A happy retailer will provide better visibility of the product and advertise it to the consumers.
- Increased Product Purchase Rate (Higher Sale Volumes): Higher visibility and consumer awareness will likely lead to higher sales, including new consumers who may want to try the product.
- Allow Entry into Newer Markets: Unexplored markets can be tapped by extensive marketing at the retailer level.
- Enable Higher Market Shares: Increased sales will provide higher market shares to the company.
- EnableTeating or Launch of New Products: New products can be tested at the retailer level and the same can be used to launch new products.
- Allow inventory Control: Excess inventory can be controlled by discounted sales.
- Better Relationship with the Retailers: Incentives are likely to enhance the retailer-company relationship, which is beneficial to both (especially in the longer run).
Q.7. Discuss about the issues in trade promotions.
Trade Promotions: Trade promotion suffers from the following issues:
- Lack of Accurate and Timely Information: Trade probate and Timely Information: Trade promotion decisions are often rushed and data. While sales and marketing managers are surrounded by promotion. information, questions on retail commitment and product forecast accuracy can hinder Multiple data sources and conflicting needs from various departments further complicate the issue.
- Inability to Plan Promotions Based on Analytics: Historical trade promotion date analyzed in order to continually improve trade promotions. If a company does not utilize systems that measure trade promotion performance, future trade promotion executions effective than if they’d been planned using past analytical information.
- Ineffective Organization and Partner Integration: Lack of integration both inter with external partners can hinder trade promotion success. Key elements of organizational in include standardized metrics, regular information sharing, cross-functional department cola and collaborative processes. Integration with retail partners is important to executing pro successfully, as well as maintain strong relationships with retailers over time.
- Lack of Appropriate Key Performance Indicators (KPI): KPIs tell manufacturer retailers how trade promotions performed relative to their pre-determined objectives. A understanding on what trade promotion data to measure and how to measure performance can the overall process. Manufacturers and retailers will not know what made a promotion effect ineffective unless they have predetermined data points to measure and analyse.
Qus.8. What do you understand by consumer promotions? What are its aims?
Ans. Consumer Promotion: Consumer promotions are tactics or techniques designed to hel business find new customers or reward current customers. The most common consumer promoting are aimed at enhancing the value of our product, either by reducing the cost or adding more benefit to the regular price. Consumer promotions encompass a variety of short-term promotional technique designed to induce customers to respond in some way. The most popular consumer sales promotions are directly associated with product purchasing. These promotions are intended to enhance the value of a product purchase by either reducing the overall cost of the product (i.e. get same product but for less money) or by adding more benefit to the regular purchase price (i.e. get more for the money)
Aims of Consumer Promotion
The aims of consumer promotion are:
- To make slow moving products fast moving ones.
- To regularize sales fluctuations.
- To overcome seasonal recession.
- To clear unsold stocks of an old product.
- To effect sales of a specific pack size (Vicks large size bottle) or in a specific market(s).
- To help launch a new product.
- To meet a competitor’s strategy.
- To build goodwill by sharing the gay spirit.
- To improve a product’s visibility on the shelf.
- To encourage trade to support the product.
Q.9. Explain the delivery formats of coupons as used widely by marketers.
Ans. Delivery Formats of Coupons: Coupons are used widely by marketers across many retail industries and reach consumers in a number of different delivery formats which are as follows:
- Free Standing Inserts (FSI): Here coupon placement occurs loosely (i.e. inserted) within media, such as newspapers and direct mail and may require the customer to remove the coupon from surrounding material (e.g. clip from newspaper) in order to use.
- Merchant Printed: A delivery method that is common in many food stores is to present coupons to a customer at the conclusion of a purchase. These coupons, which are often printed either at the bottom of the customer’s receipt or produced as a separate printout, are intended to be used for a future purchase and not for the current purchase which triggered the printing.
- Customer Generated: Coupons falling did Coupons falling within this format require the customer undertake its to produce the coupon. An example would be coupons customers print from a manufacturer’s website or e-mail. Another option and one that is growing rapidly, is for customers to select and load digital coupons via apps on mobile devices. These coupons generally appear along with a barcode image that is them scanned by an electronic reader.
- Coupon Codes: The internet is also seeing the emergence of new non pm seeing the emergence of new non-printable coupons able during online purchases. These electronic coupons are redeemed when stomper tars a designated coupon code during the purchase process.
- Customer Loyalty Coupons: Retailers with loyalty programs often permit customers to add upon to their accounts. These coupons may be manually clipped by customers from may be manually clipped by customers from the retailer’s website, app or e-mail or coupons may be automatically added to a customer’s account base in a customer’s account can then be redeemed when she/he enters loyalty card reader).
- Cross Product: This involves the placement of coupons within or on other products. To example, a sports drink marketer may imprint a coupon for its product on the package of a high-energy snack. Also, this delivery approach So, this delivery approach is used when two marketers have struck a cross-promotion arrangement, where each agrees to undertake certain marketing activity for the other.
- Product Display: Some coupons are nearly impossible for customers to miss as they are located in close proximity to the product. In some instances, coupons may be contained within a coupon dispenser fastened to the shelf holding the product while in other cases coupons may be attached to a special point-of-purchase display where customers can remove them (e.g. tear off) and use at the checkout counter.
Qus.10. Write a note on price deals in consumer promotion.
Ans. Price Deals: Price deals refer to deals intended to encourage trial use of a new product or line extension, to recruit new buyers for a mature product or to convince existing customers to increase their purchases, accelerate their use or purchase multiple units. Price deals work most effectively when price is the consumer’s foremost criterion or when brand loyalty is low.
The main types of price deals include the following:
- Discounts: Buyers may learn about price discounts either at the point of sale or through advertising. At the point of sale, price reductions may be posted on the package, on signs near the product or in storefront windows. Many types of advertisements can be used to notify consumers of upcoming discounts, including fliers and newspaper and television ads. Price discounts are especially common in the food industry, where local supermarkets run weekly specials. Price discounts may be initiated by the manufacturer, the retailer or the distributor. For instance, a manufacturer may ‘pre-price’ a product and then convinces the retailer to participate in this short-term discount through extra incentives. For v price reduction strategies to be effective, they must have the support Refund is a return of all distributors in the channel. Existing customers perceive of the full amount discounts as rewards and often respond by buying in larger T of money tendered by the quantities. Price discounts alone, however, usually do not induce customer while rebate returns a portion of the first time buyers.
- Bonus Pack: Another type of price deal is the bonus pack or money tendered by the banded pack when a bonus pack is offered, an extra amount of the customer. product is free when a standard size of the product is bought at the regular price. This technique is routinely used in the marketing of de hence there product. and beauty aids to introduce a new or larger size. A bonus pack rewards present user little appeal to users of competitive brands. A banded pack offer is when two or more are sold at a reduction of the regular single-unit price. Sometimes the products are phveira together, such as in toothbrush and toothpaste offers.
- Refunds and Rebates: A refund or rebate promotion is an offer by a marketer to return amount of money when the product is purchased alone or in combination with other products aim to increase the quantity or frequency of purchase, to encourage customers to load up product. This strategy dampens competition by temporarily taking consumers out of the stimulates the purchase of postponable goods such as major appliances and creates on excitement by encouraging special displays. Refunds and rebates are generally viewed as a reward purchase and they appear to build brand loyalty rather than diminish it.
- Coupons: Coupons are legal certificates offered by manufacturers and retailers. They grab specified savings on selected products when presented for redemption at the point of purchase Manufacturers sustain the cost of advertising and distributing their coupons, redeeming their face values and paying retailers a handling fee. Retailers who offer double or triple the amount of the coupon shoulder the extra cost. Retailers who offer their own coupons incur the total cost, including paying the face value. In this way, retail coupons are equivalent to a cents-off deal.
Manufacturers disseminate coupons in many ways. They may be delivered directly by mail. dropped door to door or distributed through a central location such as a shopping mall. Coupons may also be distributed through the media-magazines, newspapers, Sunday supplements or Free Standing Inserts (FSI) in newspapers. Coupons can be inserted into, attached to or printed on a package or they may be distributed by a retailer who uses them to generate store traffic or to tie in with a manufacturer’s promotional tactic. Retailer-sponsored coupons are typically distributed through print advertising or at the point of sale. Sometimes, though, specialty retailers or newly opened retailers will distribute coupons door to door or through direct mail.