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What are the Advantages of Trade Promotions? | OIS

What are the Key Benefits of Trade Promotions?

By <span style="font-weight:bold;color:#F63C47; font-style: italic;">Oscar Guerrero</span>

By Oscar Guerrero

Published January 17, 2023

Business-to-business (B2B) companies generally use marketing strategies that can differ from those of companies that market directly to the customers. One way a B2B company can expand its clientele, foster client loyalty, and boost profits is through trade sales promotion. Knowing about trade sales promotions can help you succeed in the field of B2B marketing if you work in B2B sales or marketing or are considering a role in this industry. In this article, you will learn what trade sales promotions are, various types of trade promotions, and their advantages.


What is a Trade Promotion?

Trade promotions are marketing campaigns and promotions put together by brands with the goal of boosting sales at a retailer, and rewarding both the retailer and the customer. A trade promotion’s main objective for brands is to boost sales through the chosen retail channels.

This approach is popular with manufacturers and wholesalers who provide incentives to the businesses they supply. Trade sales promotions can also be essential in building partnerships.


Consumer Promotion vs Trade Promotion

Consumer and trade promotions are methods of stimulating short-term consumer demand, usually for products sold by retailers. Both achieve the company’s marketing goals in the short term. However, they have some differences.


a) Different Target

Trade promotions target retailers, while consumer promotions are aimed at consumers.


b) Different Objectives

Trade promotions aim at building relationships between manufacturers and retailers. Consumer promotions, on the other hand, are incentives directed toward the end user. They are strategies designed to engage consumers in buying the products, while trade promotions encourage sales of products that are to be resold and therefore involve a business-to-business relationship.


Different Types of Trade Promotion

Brands and wholesalers can promote their products using a variety of trade promotion techniques. Here are some of the most common types of trade promotions:


1) Discounts & Markdowns

Offering discounts or markdowns to certain channel partners can appeal to the most price-sensitive segment of buyers.

Discounts and markdowns can take on a variety of shapes, including price reductions, percentage off purchases, tiered discounts (the more you spend, the more you save), and special offers like “buy X, get Y at a discounted price/% off/free, etc.”

Consider using a mobile sales software that delivers personalized promotions depending on where each customer is along their individual buying journey.

Timing is equally important. To create urgency and speed up sales, trade promotions should have a clear, finite duration. Offer various promotions based on the occasion and season, such as back-to-school deals or exclusive Christmas discounts.


2) In-store Displays

In a crowded retail setting, in-store displays like end caps or point-of-purchase displays can be a great way to draw attention to your products. They come at an additional cost just like point-of-purchase (POP) placements that tempt customers to make impulsive purchases while waiting to pay.

The use of floor decals, posters, banners, life-size display stands, and in-person product demonstrations are just a few examples of in-store display items that can be used to draw customers’ attention.

Working with your retail partners to enhance your visual merchandising and product presentation can lead to real revenue increases.


3) Bundles

Product bundles are an excellent way to boost sales of related goods. Product bundles come in a variety of forms, such as those based on holidays, fashion trends, back-to-school occasions, Black Friday sales, Cyber Monday sales, and more. Preset bundles, where products are packaged into a single offer, such as “buy 20 shampoos and 20 conditioners at a reduced price,” and dynamic bundles, where customers create their own bundles, such as “buy X items from a certain list, choose Y items from another,” are additional examples that are popular in the food and beverage industry and the beauty industry.


4) Rebates

Rebates provide your customers with money back under specific circumstances. An illustration is when a brand returns a portion of the purchase price to the customer after they purchase a predetermined quantity or value of goods within a given time frame. In contrast to discounts, which are subtracted at the time of purchase, rebates are given after payment.


5) Sales Contests

Sales contests reward retailers with gifts or even special bonuses if they sell more of your products, either within a single store or across multiple branches. Find out what drives your retailers. Cash and gifts are fine, but some people will be inspired by opportunities to grow and succeed through experiences (i.e., concert tickets, a day at a luxury spa, and more).


Benefits of Trade Promotions

Brands and wholesalers can reap numerous benefits from effective trade promotions. These include:


1. Increased order size

When done properly, trade promotions, according to research by Price Waterhouse Coopers, can boost your bottom line by 10% to 15%. To further serve consumers, promotions expose products to your customers and may influence them to buy ones they ordinarily wouldn’t. Additionally, it makes upselling and cross-selling products simpler.


2. Faster order-to-cash cycles

Every business must operate quickly, and FMCG companies are no exception. Your revenue will rise as a result of accelerating sales, which will also optimize your supply chain and cut costs. Utilize the feeling of urgency or FOMO (fear of missing out) as a motivator to buy and accelerate sales.


3. Improved profitability

FMCG businesses are constantly under pressure from thin profit margins and fierce competition. Trade promotions, however, are a real asset. Since the cost of goods is fixed and the cost of sales is fairly constant across all opportunities, increasing sales will actually increase your gross profit margins for each sales activity.


4. Enhanced customer loyalty

Trade promotions can result in better deals for consumers. You can start to surpass your rivals in terms of customer loyalty when consumers know they can go to their preferred retailers and get your products for a great price.


5. Stronger relationships with distribution channels

In wholesale, relationships are crucial, and having a history of profitable promotions aids brands and manufacturers in forging closer bonds with important stakeholders.


Final Thoughts

There are so many benefits wholesalers can reap through trade promotions. To maximize your trade promotions, consider adding B2B software that enables you to keep track of your sales across multiple platforms in real time. This will enhance your strategies and optimize the benefits of your trade promotion. For more information, feel free to contact Orders in Seconds. 

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