Question

Mary Brown has recently been appointed inventory manager of Quality Distributor Limited. She enters into dialogue with a supplier (manufacturer) of widgets to Quality and is informed that the organization is about to embark on a trade promotion which will include Quality and all of the other distributors within the supply chain.

i Briefly analyze three (3) goals (from the manufacturer’s perspective) of following through with this trade promotion.ii Discuss two options which are available to the retailer (Quality Distributor) in response to this trade promotion. (2 marks)

Answer 1

i) Three goals of the trade promotion from the manufacturer's perspective:

1. Increase sales volume: One of the primary goals of a trade promotion is to boost sales volume. By offering incentives such as discounts, rebates, or other special deals, the manufacturer aims to encourage distributors and retailers to purchase more of their products, leading to increased revenue and market share.

2. Strengthen relationships with distributors and retailers: Trade promotions can help manufacturers strengthen their relationships with distributors and retailers by demonstrating their commitment to supporting their partners' businesses. By offering attractive promotions, manufacturers can show that they value their partners and are willing to invest in their mutual success.

3. Enhance brand visibility and awareness: Trade promotions can also help manufacturers increase their brand visibility and awareness among consumers. By offering special deals or incentives, manufacturers can encourage distributors and retailers to prominently display and promote their products, leading to increased consumer exposure and interest.

ii) Two options available to the retailer (Quality Distributor) in response to this trade promotion:

Option 1: Pass on the Promotion Benefits to Customers

Quality Distributor can take advantage of the trade promotion by passing on the promotional benefits to their customers. This could include offering discounts, special offers, or bundled deals on the widgets. By doing so, Quality Distributor can attract more customers, increase sales, and improve customer satisfaction. This strategy can also help the retailer to clear out excess inventory and make room for new products.

Option 2: Invest in Marketing and Advertising

Another option for Quality Distributor is to use the trade promotion as an opportunity to invest in marketing and advertising efforts. This could involve creating promotional materials, such as banners, flyers, or online advertisements, to highlight the special offers on widgets. By increasing visibility and awareness of the promotion, Quality Distributor can attract more customers and boost sales. Additionally, this increased marketing effort can help to strengthen the retailer's brand image and build long-term customer loyalty.

Step-by-step explanation: