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Types of Trade Promotion Strategy in B2B Commerce

Gaurav Singh Rana
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Types of Trade Promotion Strategy in B2B Commerce

How does an 800-pound gorilla marketing budget sound to you? Impractical? Nielsen study showed that 60% of the marketing budget accounts for more than USD 100 Billion every year. Yes, it is happening and is very much practical.

Trade promotions are rapidly gaining momentum, as they have shown promising results recently. As B2B eCommerce has grown 10 times more than the predictions due to covid-19, technology has also contributed to the creativity in trade promotions. Are you still unsure about what trade promotion is?

What is Trade Promotion

Trade promotion is a marketing scheme where manufacturers target to increase the demand of their product in the retail market. It is also done by incentivising the distribution and retail channels, so that they actively participate in the promotional activities. The trade promotion activities are based on value-added bonuses, gifts, special pricing, and many other things. At the end of the day, trade promotion is not just about selling the product, but also about increasing brand value, gaining more reputation, earning trust, retention and knowing what works.

Types of Trade Promotion Tools in B2B Commerce

  1. In-store displays: Placement of your products in a particular shelf may come with some cost, but it benefits you. End caps are one of the most popular tools to get attention. POP placements have their own advantages, as they encourage the consumer to buy impulsively. There are many other examples such as floor stickers, banners, product demonstrations, life-size stands, posters, and many more.
  2. Deals and discounts: All buyers think about the price first before getting onto other details of the product. B2B buyers function in the same way. Deals and discounts make the buyer comfortable that they are not spending too much money. Also, these tactics encourage new buyers to at least try the product.
  3. Cashbacks: Getting some money back on every purchase feels like a little income. This is indeed a very encouraging tactic. Buyer tend to buy more products in a certain duration of time to get more money back.
  4. Sales contests: Contests are always exciting, even those who lose get some learning and fun out of it. But, the winner gets the biggest prize. In a sales contest, the manufacturer or brand motivates the retailers to sell more products by showcasing a prize for the one who will sell the most products.
  5. Coupons: A report by Valassis represented that 90% of the shoppers use coupons from different online or offline resources. It is already a popular tactic used by many; and if you are not already using it, you must do it right away.
  6. Free samples: Nobody, literally nobody denies a free sample. Samples are very small quantities of the products for testing. When you offer them for free, it costs you very little, but may convert the user into a loyal customer. Also, it increases the brand value.

Why is Trade Promotion Important

  • To increase the order size: According to a PWC survey, if trade promotions are done right, they can add 10% to 15% to your bottom line. As the product exposure increases, new potential buyers are also converted.
  • To speed up order to cash cycles: Using the sense of urgency or FOMO (Fear Of Missing Out), manufacturers speed up their sales, which results in more revenue. Additionally, it minimises the costs.
  • To improve relationship with wholesale customers: Online channels are overtaking direct engagement with sales representatives. But trade promotions give the self-buying opportunity to the buyers, which results in direct relationship building and improves customer retention.

According to a Nielson study, promotions’ efficiency is lowering down in the USA because they are focusing on increasing the frequency. In India, technology in B2B still has a long way to go. Hopefully, we won’t forget the power of personal relationships and trade promotions on the way. There are clear benefits to trade promotions, but getting them right is easier said than done. Contact us and learn how leading brands and distributors plan and execute their trade promotions.

Last Updated :
August 7, 2021
Published :
25/7/2020

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