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Promotional Strategy: Group 8ABHISHEK (PGP30122) | BHANU (PGP30306) | NIKHIL (PGP30323) |NISHANT (PGP30155)

THE COSTLY BARGAIN OF TRADE PROMOTION

May 2, 2023

SHIFT IN POWERManufacturer to Trader

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Rise of trade promotions

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Problems of trade promotions:

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WHY?

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Secure Trial for new product

Preserve self space against competitors

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FORWARD BUYING

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PROBLEMS IN FORWARD BUYING

PILING UP OF INVENTORY

STORAGE COSTS

INTEREST EXPENSES

INSUARANCE COSTS

TRANSPORTATION COST

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NO-TRADE-DEAL DISTRIBUTOR INVENTORY

SAVINGS

COST OF BUYING

COST OF STOCKING

COST OF DOUBLE HANDLING

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FRACTION OF FORWARD BUYING OF TOTAL SALES

INTERVAL BETWEEN PROMOTIONS

NUMBER OF SKUs

RISE IN UNCERTAINITY

COST TO MANUFACTURERS

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COST TO THE SYSTEM

A PART OF THE COST OF TRADE PROMOTION WHICH CAN BE QUANTIFIED

A PART OF THE COST OF TRADE PROMOTION WHICH CANNOT BE QUANTIFIED

Transportation & Handling cost Selling, General & Administrative expenses

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SOME LIKE IT ! SOME DONT !

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SOME LIKE IT ! SOME DONT !

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Living with PromotionsTrade Promotions

( Forward Buying, Coupons, Contests)

High Cost

Manufacturer Retailer

How to Tackle?

EDLPP

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What is EDLPP?

Followed By Walmart Inc.

Result in Low Fixed Cost(Less advertising, less labour, simple inventory management)

Involves low cost price strategyLess fluctuation in demand

Is EDLPP the solution to all the woes?Definitely NOT BUT

Right Direction

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THANK YOU