Value of Trade Promotions for your Business

The Route to trailblazing Trade Promotions

As Businesses & brands prepare to steer through the imposing boundary of a post-COVID-19 marketplace, the opportunity to reassess and update traditional approaches to marketing has never been more critical, especially when it comes to trade promotions.

Trade promotion is a staple of the many businesses ranging from FMCG, FMCG, Retail, Infra & Infra ancillary, BFSI etc. It is a chief reason to increase sales and grow market share. Building and maintaining trade promotions are difficult, a few companies are satisfied with their trade promotions, and many don’t have a clear understanding of where their investment is going.

Delivering effective incentives is a way for companies to expand their customer bases, encourage customer loyalty and increase profits. Understanding the different promotions that the businesses can use may allow them to make the best choice for their line of business. In this article, let us see the different types of trade promotions in India.

Understanding trade promotion
Trade promotion is a marketing activity that companies engage in to draw more customers. These exercises can include promotional discounts & financial rebates. Generally, brands and wholesalers use these tactics to create partnerships with businesses.

Trade promotion management is both the Art & Science, of managing trade spend activity. It encompasses the entire lifecycle of the trade promotion process through budget management, informed planning, accurate payments, deduction and claims resolution, and processing of customer short-pays.

Types of trade promotion

• 1. Physical displays
  Businesses can provide engaging physical displays to brick-and-mortar retail stores to help attract attention to certain products. This can be useful in the retail space, where consumers have a wide range of brands to choose from. With the right placement and visual elements, physical displays may help increase both the company's profits and the store's profits. Sometimes stores use demonstration or sample displays to promote specific products to store visitors. These allow visitors to see firsthand how they can use the products. There may be product displays near or along the checkout line. These are the point of purchase displays, that are positioned to persuade consumers to purchase additional items on their way out of the store. Other display examples include hanging signs, floor stickers, Shelf stickers and product stands.
• 2. Pricing discounts
  Businesses can use pricing discount promotions to market your items to other businesses. This is a way to encourage them to sell your products in their stores. Sometimes these businesses may offer the same discounts to their customers. In both scenarios, being able to purchase store products at lower prices may entice them to become repeat customers.
• 3. Bulk purchasing
  Bulk purchasing is a trade promotion that wholesalers commonly use with the products they sell. For example, if the company sells milk products, they may decide to sell in bulk to retailers or other business offices rather than selling to individual consumers directly. With bulk promotions, the purchasing costs per unit are usually lower for your customers. This encourages them to buy in higher quantities. There are several benefits to this type of trade promotion. It allows wholesalers' products to appear in several retail outlets, including those in international markets. This can increase brand awareness and ultimately customer loyalty.
• 4. Financial rebates
  After-purchase rebates are a popular promotion tool, as they target both the vigilant buyer and impulse/instinctive shoppers. Rebates may drive demand without any considerable impact on profit margin; Studies indicate only 20-30% of buyers claim their rebates. Related: XTypes of Consumer Promotions
• 5. Sales competitions
  Sales competitions, also known as marketing contests, are a useful way for companies to reward their customers for accomplishing a pre-determined task. For example, when promoting a sales competition among your customers, you might offer specific prizes, such as free or discounted products. These rewards may motivate your customers to purchase more products. It also encourages them to participate in a friendly competition to win prizes.

Rationale to use trade promotions

Companies can use trade promotions to meet different business goals.

• 1. Customer base expansion
  The first and foremost reason is to expand the customer base—the businesses that buy and sell your products. Building customer bases is important because it can help your company reach its highest levels of success. It's especially useful if your business has just begun operations. Trade promotions can offer opportunities to intrigue other businesses to try purchasing products from you. If their consumers respond positively, they may decide to become your long-term customers. This allows the company to continue growing its customer base.
• 2. Company profit increases
  The more customers your company gains, the more likely your profits will increase. If the trade promotions successfully encourage more consumers to purchase the products, it can lead to increased revenue. The companies can also use this extra revenue to offer additional trade promotions, like additional discounts to the consumers. Re-investing portions of your profit increases into these promotions may help your company maintain its customer base because this can help them feel valued.
• 3. Customer loyalty growth
  Using trade promotions is a great way to gain new and maintain existing relationships with other businesses. Specifically, they can help you improve customer loyalty for your B2B company. Some promotions in particular, like discounts, rebates and bulk purchasing, are very effective for promoting loyalty. Offering them can show customers that your priority is giving them positive experiences rather than earning profits. This might persuade them to continue doing business with your company over competitors.