Trade Allowances and Sales Incentives

Short-Term Trade Allowances

This promotion offers channel partners price breaks or other incentives for agreeing to stock the product. In most cases, the allowance is not only given as encouragement to purchase the product but also as an inducement to promote the product in other ways. For instance, it may be used for: obtaining more attractive shelf space; securing a high-traffic store location; highlighting the product in company-produced advertising, website or app (e.g., featured product); or agreeing to have the retailer’s sales personnel “talk-up” the product to customers.

Allowances can be in the form of price reductions, also called off-invoice promotion, where the price is lowered based on the quantity purchased, and buy-back guarantees, where a manufacturer agrees to accept fully refunded returns for product that does not sell within a certain period of time.

Sales Incentives or Push Money

Since sales promotions are intended to stimulate activity that leads to meeting promotional objectives, it makes sense that these can also apply to those in a channel member’s organization who also affect sales. Primarily, marketers may offer sales promotions to their resellers’ sales force and customer service staff as incentives to help sell more of the marketer’s product. Sometimes called push money, these promotions typically offer employees cash or prizes, such as trips, for those that meet sales requirements.