Different Types of Trade Promotions and Their Importance in CPG and FMCG.


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Trade promotion is a critical component of the CPG supply chain. It’s an important method to Increase sales, create awareness, boost adoption and larger assortment for companies with distributors, wholesalers, retailers. In this blog, we’ll take a look at different types of trade promotion their planning, and how they work and why they are so essential for the success of a business.


Trade promotions are often the most effective way to increase sales. In fact, they can be very successful in driving product awareness and sales by offering discounts on products that people have not yet heard about or even seen in stores. This makes trade-in programs extremely effective for both manufacturers and retailers alike because it allows them to promote their products without having to invest heavily upfront costs into advertising campaigns or other promotional methods like coupons or giveaways (which may not be compatible with each other).

Trade promotions are commitment by a CPG manufacturer to Distributors, wholesalers, retailers and their customers involving price discounts, additional quantities, or premiums.

  1. Trade promotions are type of sales promotion that involves offering discounts, additional quantities, or premiums to distributors to help create more demand for the company’s products. They can also be used to increase brand loyalty by making sure that distributors, wholesalers, and retailers know what they’re getting when they buy from the company. 


Trade promotions can help companies gain market share because if more people buy their products than others’, help them acquire more customers and get better market coverage. Some types of trade promotions are:


  1. STPR: Secondary Trade Promotions, these are usually price offs or percentage discounts given on the order invoice to encourage higher one-time purchase
  2. QPS: Quantity Purchase Scheme, percentage discounts or absolute discounts, offered upon achievement of targets over a certain period, like over a month or quarter.
  3. Loyalty promotions: Distributors can earn points on buying certain kinds of promoted packages or products, which can then be exchanged for goodies such as gold or consumer electronics. These are leveraged for engaging the trade, and driving a feeling of continuous value
  4. Assortment promotions: Distributors offer retailers a fixed percentage discount or promotion or when they buy a line or assortment of products. This is usually done to increase a wider spread of product and diversify the portfolio beyond just the primary SKUs.
  5. Trade Bonanza: These are usually longer-term schemes, such as over a quarter or more for achieving a substantial target. Trade bonanzas are used for trade loading before the product’s primary offtake season, to minimize availability concerns, for example skin cream just before winters. These ensure wider availability of the product and capital allocation to the brand, enabling the brand to increase its market share through improved availability and distribution.
  6. Visibility discounts: These promotions are visibility initiatives, that help generate customer recall at the point of sale and create brand and product recall at the moment of purchase. Some of the visibility discounts, usually fixed amount, are paid out in lieu of minimum purchase amount and the store allowing for a space to setup of a product asset within the store to improve offtake for the product

Trade promotion plans now require a sophisticated technology tool with strong predictive analytics capabilities.

A trade promotion management solution should be able to help brands and retailers analyze past performances while creating strategy models for future trade promotions.

The following features are an essential part of managing trade promotions efficiently:


  1. Analyze past performance. Brands will want to know how their current campaigns are performing, so they can modify or expand on them if necessary. Automated process that lets companies track key metrics such as cost per acquisition (CPA) or cost per lead (CPL) can help brands adjust strategies accordingly—if a campaign is not working well enough at getting new customers into stores, then perhaps it’s time for another approach altogether!
  2. Create strategy models for future trade promotions. Once the system has analyzed all of its own data about which campaigns worked best before and what else might work better now.

Botree extensive DMS Suite has inbuilt features that can help companies deploy trade promotions in real time and adjust strategies at a micro geography level on the fly.

Trade promotion planning is a dynamic and ever-evolving process. It is key for brands to stay abreast of changes in the industry to stay competitive. Software solutions have been developed that allow retailers and manufacturers to manage their trade promotions effectively, so that both can be confident about their success.


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