Think of merchandising allowances as “fees for favouritism”. There may be a monetary or prize rewards such as travel, gifts, or discounts that are given to retail stores or wholesalers for featuring a product. In a way, we are purchasing real estate-shelf space, displays, features – for our product.

3. Contests:

B2B contests are geared toward distributors, brokers, retailers, etc. For example, company may establish a contest for its distributors. These contests help push sales along by offering personal rewards for an added performance. An example of this can be seen with salespeople. The most effective sales person may win cash, prizes, or exciting trips.

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4. Performance allowances:

(i.e. advertising allowance) – This monetary fund is set aside to subsidize the advertising initiatives of resellers. Most of the times, these advertisements target a local audience or smaller population. For example, Xerox may have a national advertising campaign, which includes television commercials and magazine advertisements.

However, a small-town distributor may advertise Xerox machines in a weekly flyer on its own. Xerox would then reward the distributor for their efforts by offsetting a portion of the distributor’s prior year’s advertising costs based on the distributor’s total product purchases.

5. Dealer Incentives:

Getting a dealer to sell your product instead of your competitor’s is difficult. Both we and our competitor may occupy the same niche and offer similar benefits. Perhaps our competitor has an edge over us, whether it be in brand popularity, pricing, or customer loyalty. Offering dealer incentives is one way to help secure our position. Rewarding the dealer with the bonuses or prizes encourages them to choose our product and sell it enthusiastically.

6. Point-of-purchase:

It is an element of sales promotion which includes displays and signs for the retail outlet. Due to decrease in brand loyalty and increase in value for money, the dependence on POP promotions by marketers is on an increase. 70% of consumers come out with the products and brands that are very different from the ones they had meant to buy when they entered the stores. This is the power of point of purchase. PepsiCo provides a transparent fridge to its cola distributors.

7. Business Gifts:

Gifts are given to traders to promote goodwill. In the grocery trade they are often termed as ‘dealer loaders’ to persuade dealers/distributors to load up with the stock beyond their requirements in return for an item of merchandise.