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MBA Trade Promotion Long Question Answer Set in English

MBA Trade Promotion Long Question Answer Set in English

MBA Trade Promotion Long Question Answer Set in English

MBA Trade Promotion Long Question Answer Set in English
MBA Trade Promotion Long Question Answer Set in English

MBA Trade Promotion Long Question Answer 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.

Section C


Qus.1. Describe the major types of trade promotions that can be run by a company.

 Ans.         Major Types of Trade Promotions 

The major types of trade promotions that can be run by a company are:

  1. In-store Displays: In-store displays are promotional fixtures in retail stores. Variations of in-store displays include Point-of-Sale Displays, which are located near cash registers to encourage impulse buying; Floor Stickers or advertisements for products on the aisle of a store; Feature Displays, which can be located at the end of an aisle to draw attention to a product and Special Racks or manipulation of a store shelf to make more space available for a product or bring attention to the promoted product. In-store Displays can be perceived as more visually appealing to consumers than product alone on a retail shelf.
  2. Temporary Price Reductions (TPR): TPR are either directly or indirectly lower the cost per unit of a product. For example, include ‘cents off’ promotions, where manufactures or retailers temporarily reduce the price of a product and Bonus Pack promotions which offer extra product for free. Consumers benefit from either paying a lower price on a product or getting more of a product for the same price.
  3. Coupons: Coupons offer instantly redeemable savings on certain products. Coupons can be featured on in-store displays, on their own or on the product. Coupons instantly reduce the price of a product, making it more desirable to consumers.

Coupons can have both advantage vantages and disadvantages. Coupons create brand awareness. The mar sees the brand name on the coupon even when the coupon is not redeemed. Come coupon is not redeemed. Coupons, also, on with using a coupon are: urge consumers to purchase brands on the next trip to the store. The disadvantages the to the store. The disadvantages that come along with using a coupon are:

(a) Reduced revenues

(b) Mass-Cutting

(c) Counterfeiting

(d) Miss redemptions

  1. Rebates: Rebates offer money back to the consumer. Unlike coupons, rebate sedately, but instead must be mailed to the product’s manufacturer. Consumers lower price, while companies benefit because not every consumer will redeem the offer.
  2. Premiums: Premiums incentivize consumers to purchase a product with a tangy Welted product for no additional cost. s no-obligations gift. Premiums make the product offer more valuable to consumers by codt.

Cooperative advertising: Cooperative advertising simply refers to an agreement between manufacturers and resellers to share the advertising cost for the manufacturer’s brands. This is often seen as a catalog produced by a retailer that is highlighting brands for sale within the store. The cooperative advertising actually helps the awareness of the channel dealer in that region. This in turn helps the overall sales of the products and the brand Cooperative advertise

as or the products and the brand. Cooperative advertising should be done when the for the

Healer has launched or prior to seasonal sales. This increases the recall of the brand in the mi consumers.

7 Sales-training Programmers: An increasingly popular trade promotion is to provide training

for retail store personnel. This method is used specially for consumer durables like personal computers, exercise equipment, etc. The increased complexity of these products has made it important for manufacturers to ensure that the proper factual information and persuasive themes are reaching consumers at the point of purchase. For personnel at large retail stores, manufacturers can hold special classes that feature product information, demonstrations and training about sales techniques. Another method to give information would be the use of videotapes and brochures.

  1. Point-of-Purchase (POP) Displays: Manufacturers provide Point-of-Purchase (POP) display units free to retailers in order to promote a particular brand or group of products. The forms of POP displays include special racks, display cartons, banners, signs, price cards and mechanical product dispensers. Probably the most effective way to ensure that a reseller will use a POP display is to design it so that it will generate sales for the retailer. High product visibility is the basic goal of POP displays. In non industries such as the grocery field where a shopper spends about three-tenths of a second viewing a product, anything increasing product visibility is valuable. POP displays also provide or remind consumers about important decision information, such as the product’s name, appearance and sizes. The theme of the POP display should coordinate with the theme used in ads and by salespeople.

9 Trade Shows: Trade shows are organized events that bring industry buyers and sellers together in one central location. In most cases, this is a physical environment (e.g. convention center), though virtual trade shows are also presented over the internet. While the cost of participating in trade shows is often quite high, marketers are attracted to this promotional method since it offers the opportunity to reach a large number of potential buyers in one convenient setting. At these events, most sellers rather attention of buyers by setting up a display area to present their product offerings agential customers. These displays can range from a single table covering a small area to erecting specially built display booths that dominate the trade show floor.

Trade shows provide a major opportunity to write orders for products. They also provide a Chan ducts disseminate information, answer questions and be compared directly to can be re old to demonstrate products, disseminate trade shows, but on a smaller scale, are sales meetings sponsored by

Manufacturers or wholesalers. Whereas trade shows are open to all potential meetings are targeted toward the company’s sales force and/or independent sales meetings are usually conducted regionally and directed by sales managers. The meeting to motivate sales agents, to explain the product or the promotional campaign or sum questions. For resellers and salespeople, sales contests can also be an effective motivation prize is awarded to the organization or person who exceeds a quota by the largest percentage.

0.2. What are the objectives, advantages and disadvantages of consumer promotion? premiums and sampling in consumer promotion. 

Ans.              Objectives of Consumer Promotion 

The various objectives of consumer promotion are as follows:

  1. Consumer promotions are a way to attract new customers and grow the customer baseman a common objective for new companies or new product launches.
  2. Getting customers to switch brands by offering free samples and free trials is another This approach limits the risk to customers when giving the product a try.
  3. Clearing out extra merchandise, combating competitor promotions and generating short.

term revenue and cash flow are other common consumer promotion goals.

Advantages of Consumer Promotion

A successful promotional campaign has the capability to nurture relationships with consumers through maintenance and engagement. The following is a list of advantages that consumer promotion can provide to a brand.

  1. Opportunity: A promotion allows brands the opportunity to communicate on packaging and enables them to focus campaigns around an event. Communication is a skill that creates formidable relationships with consumers that make your brand unique.
  2. Reputation: A brand is not the only one who can communicate a consumer promotion. Word of mouth is one of the most positive forms of communication, especially if it is coming from a friend or colleague, as they are usually a trusted and reliable source.
  3. Differentiation: A brand needs to be different to survive and a consumer promotion can be a fantastic way to make a brand stand out from the crowd. It holds the potential to add unique value to a customer through a competition or unique experience, creating a reason to choose our product in a crowded market
  4. Revenue: Simply put, more sales from our promotion will create higher revenue. However, brands need to always calculate their costs and ensure they are aware of how many people may redeem the promotion and ensure that it is a profitable endeavor.
  5. Focus: A consumer promotion often becomes an event for the company, which then allows it to focus all its channels of marketing. A focused approach can force a firm to change the way they market themselves and create brand engagement through those changes.
  6. Information: When customers attempt to redeem promotions, brands can often retrieve data such as e-mail addresses and their home address. This creates the opportunity to target a customer through segmentation. We can then use direct mail or e-mail campaigns to create personalized marketing.
  7. Incentive: All the points above drive sales and make consumers’ decision-making much simpler. If a brand is offering a similar product but something additional, then the consumer will often want more for their money which is an incentive.

Disadvantages of Consumer Promotion

Consumer promotion has the following disadvantages:

  1. Consumer promotions have temporary and short life not exceeding three months. Consumer

promotion alone cannot build up brand loyalty.

  1. Consumer promotions are only supplementary devices to supplement selling efforts of other

promotion tools.

  1. They are non-recurring in their use. They have seldom reuse values.
  2. Too many consumer promotions may affect adversely the brand image, suggesting its lack of

popularity or overstocking by a company.

  1. Advertising agencies accord low status to sales promotions and usually employ junior station

consumer promotion so that they may be trained for more creative jobs.


A premium is tangible compensation that is given as incentive for performing a particular act-usually buying a product. The premium may be given for free or may be offered to consumers for a significantly reduced price. Some examples of premiums include receiving a prize in a cereal box or a free garden tool for visiting the grand opening of a hardware store.

Two types of premiums are:

  1. Direct Premiums: Incentives that are given for free at the time of purchase are called direct premiums. These offers provide instant gratification, plus there is no confusion about returning coupons or box tops or saving bar codes or proofs of purchase.

Other types of direct premiums include:

(a) Traffic-Builder Premium: It is an incentive to lure a prospective buyer to a store. The garden tool is an example.

(b) Door-Opener Premium: It is directed to customers at home or to business people in their

offices. For example, a homeowner may receive a free clock radio for allowing an insurance agent to enter their home and listening to his sales pitch. Similarly, an electronics manufacturer might offer free software to an office manager who agrees to an on-site demonstration.

(C) Referral Premium: The final category of direct premiums, referral premiums, reward the

purchaser for referring the seller to other possible customers.

  1. Mail Premiums: Mail premiums, unlike direct premiums, require the customer to perform some act in order to obtain a premium through return mail. An example might be a limited edition toy car offered by a marketer in exchange for one or more proofs-of-purchase and a payment covering the cost of the item plus handling. The premium is still valuable to the consumer because they cannot readily buy the item for the same amount.


A sign of a successful marketer is getting the product into the hands of the consumer. Sometimes, particularly when a product is new or is not a market leader, an effective strategy is giving a sample product to the consumer, either free or for a small fee. But in order for sampling to change people’s future purchase decisions, the product must have benefits or features that will be obvious during the trial.

There are several means of disseminating samples to consumers.

  1. Through Mail: The most popular has been through the mail, but increases in postage costs and packaging requirements have made this method less attractive. An alternative is door-to-door distribution, particularly when the items are bulky and when reputable distribution organizations exist. This method permits selective sampling of neighborhoods, dwellings or even people.
  2. Through Advertising: Another method is distributing samples in conjunction with An ad may include a coupon that the consumer can mail in fort ledge or it may include an address or phone number for order sampling can be achieved through prime m O Sampling is a scratch-and-sniff cards and slim foil pouches or throe excellent way to using special displays or a person hired to hand out introduce our product in passing customers. Though this last technique may buy the market and at the same time to increase the for the retailer, some retailers resent the inconvenience and require high payments for their cooperation.
  3. Through Packages: A final form of sample distich deals with specialty types of sampling. For instance, some companies specialize in packing together for delivery to homogeneous consumer groups, such as newlyweds, new parents.stu tourists. Such packages may be delivered at hospitals, hotels or dormitories and include a nu different types of products.

Q.3. Describe the important types of consumer promotion tools. 

Ans.                        Consumer Promotion Tools

The important types of consumer promotion tools are:

  1. Coupons: A coupon is a certificate that fetches buyers a saving when they purchase a specified product. Coupons are generally issued along with the product. They entitle the holder to either specified saving on a product or a cash refund.

Coupons are designed:

(a) to introduce a new product,

(b) to promote the sale of an established product,

(c) to sell a product in large sizes,

(d) to stimulate customers to switch brands; and

(e) to encourage repeat sales.

Coupons are used for consumer convenience goods. They may be distributed door to door, by mail or they may be inserted in packages. Sometimes, coupons may be part of magazine or newspaper advertisements.

  1. Demonstration: Demonstration is required when products are complex and of a technical nature. Customers are educated as to how to make proper use of the product. Demonstration of products induces customers to buy. Demonstrations are provided free of cost.
  2. Contests: Contests are the promotion events that give consumers the chance to win something such as cash, trips or goods. Contests are conducted to attract new customers. They introduce new product by asking the prospects to state the reasons for the purchase of the product. The buyer purchases the product and submits the evidence of purchase with entry form for contest. Entry forms are duly filled by the buyers. A panel of judges selects the best and buyers are given prizes.
  3. Rebates: Rebates, like coupons, offer value to purchasers typically by lowering the customer’s final cost for acquiring the product. While rebates share some similarities with coupons, they differ in several keys aspects.

(a) First, rebates are generally handed or offered (e.g. accessible on the internet) to customers

after a purchase is made and cannot be used to obtain immediate savings in the way coupons are used.  these as coupons due to the timing of the reward to the customer.)

(b) Second, rebates often request the purchaser to submit personal data in order to obtain the

rebate. For instance, customer identification, including name(So called ‘instant rebates’, where customers receive price reductions at the time of purchase, have elements of both coupons and rebates, but for our purposes we will.classifye, address, phone and e-mail ,

contact information, is generally required to obtain a rebate. Also, the marketer may ask for a purchase. those seeking a rebate to provide additional data, such as indicating the reason for making the purchase

(c)Third, unlike coupons that always offer value when used in a purchase (assuming it is accepted by the retailer), receiving the value of a rebate only occurs if the customer takes action after the purchase. Marketers know that not all customers will respond to a rebate they have received. Some will misplace or forget to submit the rebate while others may submit after a required deadline Marketers factor in the non-redemption rate as they attempt to Calculate the cost of the rebate promotion.

  1. Cash Refund Offer: Cash refund offers are rebates allowed from the price of the product. It is a manufacturer. offer to refund part of the purchase price of a product to consumers who send a proof of purchase to the manufacturer.

Moreover, if the purchaser is not satisfied with the product, the whole price or part of it will be refunded. Cash refunded offer is stated on the package.

  1. Premium: Premium refers to goods offered either free or at low cost as an incentive to buy a product. A premium may be inside the package, outside it or received through mail. The reusable package itself serves as a premium

Premium is generally offered for consumer goods such as soap, toothpaste, etc, Premium may be or several kinds – direct premium, reusable container, free in mail premium, a self liquidating premium, trading stamps, etc.

(a) Direct premium can be inside the pack or outside it.

(b) A reusable container can be reused after the product is reused.

(C) Free in mail premium means a premium item will be sent by mail to consumers who present proof of purchase to the manufacturer.

(d) A self liquidating premium is the extra quantity offered at the normal price.

(e) Trading stamps are given by the seller to consumers. These are redeemable at the stamp redemption centers.

  1. ‘Price Off’ Deal: One of the simplest sales promotions is the straightforward percentage or price-off deal. This is where we mark down all products, specific types of products or a single product by a set dollar amount or a percentage. The general objective is to enhance the value proposition by indicating a lower price for the same quality or service. Errors in price adjustments can lead to alienated customers. In other words, in case of price-off deals, goods are sold at reduced prices during slump season and reduction in prices stimulates sale of goods.
  2. Consumer Sweepstakes: Sweepstakes or drawings are not skill based, but rather based on luck. Winners are determined by random selection. In some situations, the chances of winning may be higher for those who make a purchase if entry into the sweepstakes occurs automatically when a purchase is made But in most cases, anyone is free to enter without the requirement to make a purchase.
  3. Games: A subset of both contests and sweepstakes are games, which come in a variety of Formats such as scratch-off cards and collection of game pieces. Unlike contests and sweepstakes, which may not require purchase, to participate in a game, customers may be required to make a chosen In the United States and other countries, where eligibility is based on purchase, games may be subjected to rigid legal controls and may actually fall under that category of lotteries, which are tightly controlled.

10 Samples: Samples are one of the most important tools of consumer promotion. Samples are defined as offers to consumers of a small amount of a product for trial. Free samples are given to Consumers to generate their interest in the product. Samples help consumers verify the quality of the product Samples are delivered at the doors of consumers. They are also sent by mail or given to customers in the retail store itself. Sometimes, samples are attached to another product

Though sampling is effective, producing numerous samples of a product is quite Moreover, distributing samples to customers also involves expenditure.

Sampling is not justified in case of:

(a) well established product,

(b) a product that is not superior in some way to competing products,

(c) a product with a slow turnover,

(d) a product with a narrow margin of profit, or

(e) a highly fragile, perishable or bulky product.

  1. Buy Back Allowances: Allowances are granted to buyers on the basis of their purchases. In other words, buy back allowances are given for new purchases, based on the quan goods bought previously.
  2. Sales/Promotional Pricing: Introducing and promoting a sale price can encourage multi purchases of a product within a set timeframe. Sales or promotional pricing can be a great way to m product and can be planned and advertised in advance and on location during the offer period.
  3. Loyalty Programs: A technique that offers customers a reward for frequent purchasing other activity). Loyalty programs encourage brand loyalty and provide added value to repea customers.
  4. Trade-In: Trade-in promotions give consumers a discount or a price break on a purchase if they exchange something they already own, such as an older model or item that the new product will replace.
  5. Short-term Trade Allowances: This promotion offers channel partners price breaks or other incentives for agreeing to stock the product. In most cases, the allowance is not only given as encouragement to purchase the product but also as an inducement to promote the product in other ways. For instance, it may be used for:

(a) Obtaining more attractive shelf space,

(b) Securing a high-traffic store location,

(C) Highlighting the product in company-produced advertising, website or app (e.g., featured product).

(d) agreeing to have the retailer’s sales personnel ‘talk-up’ the product to customers.

Allowances can be in the form of price reductions, also called off-invoice promotion, where the price is lowered based on the quantity purchased and buy-back guarantees, where a manufacturer agrees to accept fully refunded returns for product that does not sell within a certain period of time.

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