This document discusses the issues with trade promotions between manufacturers and retailers. It notes that trade promotions have shifted power from manufacturers to retailers. Trade promotions can cause problems like excess inventory holding costs for retailers and manufacturers due to forward buying. The document also discusses the high costs of trade promotions for both parties and potential solutions like Every Day Low Price and Promotion (EDLPP) pricing strategy, which aims to reduce fluctuations in demand and costs. However, EDLPP is not a perfect solution and only moves in the right direction.

1. Promotional Strategy: Group 8
ABHISHEK (PGP30122) | BHANU (PGP30306) | NIKHIL (PGP30323) |NISHANT (PGP30155)
THE COSTLY BARGAIN OF TRADE
PROMOTION
October 27, 2015
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2. SHIFT IN POWER
Manufacturer to Trader

3. Rise of trade promotions
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4. Problems of trade promotions:
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5. 5

6. Secure Trial for new
product
Preserve self space
against competitors
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7. FORWARD BUYING
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8. PROBLEMS IN FORWARD
BUYING
PILING UP OF INVENTORY
STORAGE COSTS
INTEREST EXPENSES
INSUARANCE COSTS
TRANSPORTATION COST
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11. NO-TRADE-DEAL DISTRIBUTOR INVENTORY
SAVINGS
COST OF
BUYING
COST OF
STOCKING
COST OF
DOUBLE
HANDLING
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12. FRACTION OF
FORWARD BUYING OF
TOTAL SALES
INTERVAL BETWEEN
PROMOTIONS
NUMBER OF SKUs
RISE IN UNCERTAINITY
COST TO MANUFACTURERS
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13. COST TO THE SYSTEM
A PART OF THE COST OF TRADE
PROMOTION WHICH CAN BE
QUANTIFIED
A PART OF THE COST OF TRADE
PROMOTION WHICH CANNOT BE
QUANTIFIED
Transportation & Handling cost Selling, General & Administrative expenses 13

14. SOME LIKE IT ! SOME DONT !
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15. SOME LIKE IT ! SOME DONT !
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16. Living with Promotions
Trade Promotions
( Forward Buying, Coupons, Contests)
High Cost
Manufacturer Retailer
How to Tackle?
EDLPP
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17. What is EDLPP?
Followed By Walmart Inc.
Result in Low Fixed Cost
(Less advertising, less labour, simple inventory management)
Involves low cost price strategy
Less fluctuation in demand
Is EDLPP the solution to all the woes?
Definitely NOT
BUT
Right
Direction
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