Week 12.3 Trade-oriented Sales Promotions, Public Relations, and Green Washing

Trade-oriented Sales Promotions

We covered consumer-oriented sales promotions in the previous lesson. We move on to trade-oriented sales promotions in this lesson. Trade-oriented sales promotions are promotions directed to intermediaries in the marketing channel such as wholesalers, retailers, or distributors. Some of the consumer-oriented promotional tools covered in the previous lesson can be applied towards intermediaries as well. In addition, there are three common trade-oriented sales promotions that we would like to examine:

  • Allowances and discounts
  • Cooperative advertising
  • Training of distributors' salesforces

Allowances and Discounts

Producers employ allowances and discounts to encourage larger orders by intermediaries such as retailers and wholesalers. One important point is that such allowances and discounts should be used with care. If they are applied frequently, it can lead to intermediaries changing their ordering patterns in the expectation of such promotions. 

There are three common allowances:  

  1. Merchandise allowance: The producer/manufacturer reimburses a retailer for extra in-store support during special featuring of the product. For instance, the product is shown in a newspaper with a coupon that is valid at the specific location of the retailer. The producer/manufacturer gives a percentage deduction from the list price to the retailer during the promotional period.
  2. Case allowance: The producer/manufacturer offers a discount to the retailer or wholesaler on each case ordered during a specific time period. For example, one case is free for every ten cases ordered. The goal is to encourage larger orders from the intermediaries in the marketing channel. 
  3. Finance allowance: The producer/manufacturer pays retailers for financing costs or financial losses associated with consumer sales promotions. Finance allowances are commonly applied on an ongoing basis. One type is the floor stock protection program in which the manufacturer gives retailers allowances in order to prevent shelf stock from running down during promotional periods. 

Cooperative Advertising

Retailers pay for advertisements in media. In the case of cooperative advertising, the producer/manufacturer pays a percentage of the retailer's advertising expense in order to get more exposure for its product. Cooperation on advertising costs helps the retailer to increase the amount of advertising at the same time as it provides more exposure to the manufacturer’s product. 

Training of Distributors' Salesforces

In many cases, the sale of a manufacturer’s product is done in the retail stores. The retailer’s salespeople play an important role in the success of the sales. Especially for complex products, manufacturers might want to provide some support to retailers by training the retailer’s salespeople.  The knowledge of the salespeople makes a difference in answering questions from potential buyers. Training can help increase the sales, which benefits both the retailer and the manufacturer. 

Concept Check Question:

1. Which trade promotion is used on an ongoing basis?

 

Public Relations

Public relations refers to communication management. Usually public relations staff focus on creating a positive influence on the feelings, opinions, or beliefs of the public about the company and its products/services. In some cases, public relations staff would need to deal with minimizing the negative impacts of a problem. This is often called crisis management.

The most frequently used public relations tool is publicity. Publicity is a non-personal, indirectly paid presentation of an organization, good, or service. News releases and news conferences are the two most commonly used publicity tools. 

A news release consists of an announcement regarding the changes in the company or the product line. The goal is to identify the introduction of a new product or a big change in the structure of the company such as a new CEO. A news release is the most popular form of publicity. 

news conference is different than a news release in the sense that it is not about an announcement. In the case of a news conference, a company invites representatives of the media to an informational meeting. News conferences are commonly used in crisis management. When there is a negative incident, it might require a response from the company. A news conference provides the medium for the company to present the facts and clear the air regarding the situation, including the actions the company is taking. 

Public relations are not limited to news conferences and news releases. Sponsorship marketing is also included in public relations. Sponsorship marketing could be in the form of event or cause sponsorship. The biggest sponsorship marketing event in the world is the Olympic Games. 

Photo of olympic skiers.
Examples: The Olympic Games. CIBC’s official sponsorship of the Canadian Breast Cancer Foundation's "Run for Life" campaign.

Public relations tools might include the development of annual reports, newsletters, corporate websites, or videos about the company. The goal is to spread a positive image of the organization. Social media has become a significant part of many public relations departments. Responding to the related comments on social media and facilitating positive discussions are a part of public relations. Public relations professionals are actively engaged in most social media such as Facebook, YouTube, LinkedIn, Instagram, Wikipedia, Skype, etc. Consumers report that they are influenced in their purchase decisions by feedback that they see on social media. 

At the end of this lesson, it would be a good opportunity to mention the importance of green marketing. Many companies are engaged in sustainable practices in their businesses. They are motivated by three bottom lines: people, planet, and profit. The goal is to serve people with their best ability and to earn the highest possible profits while protecting the planet. We have mentioned green marketing with examples in previous lessons. Unfortunately, there are some companies who only pretend to be environmentally friendly. This brings us to the definition of "green washing."   

Green Washing

Environmental protection is on the radar of most businesses. There are some cases in which companies behave as if they are environmentally friendly while their practices do not support that claim. Green washing is defined as disinformation spread by an organization so as to present an environmentally responsible public image. In reality their behaviour does not fit into environmental protection practices. They simply claim to be green or to engage in sustainable development without any actual involvement. These companies are called green washers. Green washing is a deceptive marketing practice. The reason why it exists is because it can be difficult for the consumers to check the claims the companies are making. Consumers might not easily determine which companies are really green and which are not. Companies particularly have a tendency to green wash in food marketing since the claims of sustainable agricultural practices can attract consumers. 

Stop and Think Question: What can be done in order to combat green washing? Think about possible ways of determining green washing practices before revealing the answer. 

ECOLOGO sticker with UL logo.

The best way of defeating green washing is to spread actual facts and information to the consumers. Regulatory bodies are crucial in fact checking. The government can play an active role in combatting green washing. For example, the Canadian government developed ECOLOGO to help Canadians learn of genuinely environmentally preferable products/services. ECOLOGO is an eco-labelling certification program. It certifies a variety of products/services, such as household and industrial cleaning products, laundry detergent, paper, tissues and napkins, paints, renewable electricity, office furniture, printers, flooring, and other renovation and building supplies.

ECOLOGO-certified environmentally preferable products are sold by various retailers across Canada. You can find the full list of companies and product categories on their website.

 

 

 

Concept Check Questions:

1. Which of the following is the most popular form of publicity? It consists of an announcement regarding changes in the company or product line.

 

2. A news conference is a(n)