Trade Promotions
Chapter 13 Overview
The Critical
Components
The Robison-Pattman Act
Marketing Development Funds
Display / Feature Activity
Slotting Allowances
Account Specific Promotions
Third-Party Promotions
Robison - Pattman
Must treat all retailers on an “equal
basis” in terms of your product
marketing.
OK to scale in proportion to volume.
Smith’s vs. Dan’s
Marketing Development
Funds (MDF)
Money accrued on a per-case basis to
fund marketing activity for that particular
brand within that particular store chain.
May be used to fund displays, feature
activity, price reductions. Usually NOT
allowed to be given to the store and
dropped to their bottom line.
MDF
Just about ALL grocery chains deal in
MDF.
Walmart the exception. They require
the brand to roll all MDF monies into
lowering the cost price to Walmart for
the product. Walmart does not play the
game.
The Difference
Typical Grocer
Walmart
Cost Per Case:
Cost Per Case:

$14.00
Accrues $2.00 per
case MDF

$12.00
Store-Level
Marketing Activities
Shelf (price reduction, instant coupons)
Off-shelf display (in-aisle stack or shipper
display case).
End-aisle display
Display with Feature Pricing
The Volume Effect
Store Shelf
1x
Off-Shelf Display Only
2.5 x
End Aisle Display Only
4x
Feature Price Only
7x
Off-Shelf Display + Feature Price
10 x
End Aisle Display + Feature Price
13 x
The Economics
(Net Brand Profit)
Store Shelf
$2,436
End Aisle Display Only
$2,744
Feature Price Only
$7,152
End Aisle Display + Feature Price
$10,568
The Economics
(Net Chain Profit)
Store Shelf
$2,016
(30.37%)
End Aisle Display Only
$15,604
(44.90%)
Feature Price Only
$12,252
(27.97%)
End Aisle Display + Feature Price
$25,468 (29.77%)
Coupon Opportunities

Catalina “Checkout” Coupons

Direct Mail “Smart” Coupons

In-store “Instant” Coupons

National FSI’s
Which One?
Depends on your objectives.
It hurts to give coupons to your loyal
customers who will pay full price.
Instant-Coupons highest redeeming, but only
make sense if you are a small brand fighting
for sales. It’ll kill you if you’re a category
leader.
Coupon Economics
Lot’s of hands in the food chain:

Distributor (Catalina, In-store, Vlassis)

Redemption ($$ per coupon)

Redemption House Processor
Who Pay’s
Coupon costs are ALL payable out of
the brand’s national marketing budget.
In-store features, displays are paid out
of the MDF monies accrued by the store
and managed by the sales force, not the
brand team.
Account-Specific
Promotions
The preferred method by retailers.
They want promotions that set them apart as
different, better & special, not the same
promotion the store down the street has on
your brand.
The promotion reflects on the STORE, not the
BRAND. Consumers don’t know where it’s
coming from, and assume it’s the store doing
it.
Account-Specific
Methods
Proprietary programs (Disney Video Cart at
Target)
Tagged Media
Point-of-Sale Materials
Display cases (especially refrigerated)
Third-Party Promotions
Slotting Allowances
Required for getting placement on any new
product (usually).
The economics are simple….eight out of ten
new products fail. The stores need to protect
their profitability, and want the companies to
put their money where their mouth is to get it
into the store.
New Product
Proliferation
Over 25,000 new products presented each
year to the grocer.
That’s about 100 per business day over the
course of the year.
They want to see your marketing plan,
advertising plan, and your agreement to pay
the slotting allowance as price of admission.
Product has 45 days to prove itself or it’s
gone.
Unique Promotions
A really great and unique promotion can
get the chains to waive slotting fees, but
it’s gotta be GREAT!



Olympic Torchbearer (Coke)
Catamarans (Hawaiian Punch)
Autographed Stuff
Trade Before Consumer
You have to figure out how you are
going to market your product
successfully at the trade level BEFORE
you can market successfully to
consumers.
The TRADE is the GATEKEEPER.