Managing Trade Promotions in Marketing Channels: Antecedents to Participation Decisions

Trade promotions have become an immensely popular strategic marketing tool -- especially within the grocery industry. Grocery manufacturers, distributors, and other sellers use trade promotions to foster closer relationships with buyers, gain merchandising support, and manage inventory levels. Grocery retailers depend upon the promotions to keep them economically viable. Maintaining economic viability is even more of a problem for independent grocers than for larger chain operations. Although independents typically require more effort to reach and higher costs to service their accounts, independents represent significant volumes in many markets.

The current research examined the influence of market position (market share), economic incentives, customer service, and institutional and interpersonal relationships on promotion decisions. Each of these considerations has important implications for marketers selling to independent grocers. Results of a recent survey of independent grocers are presented which provide greater insight into the complexities involved. While the size of the trade discount had the largest effect on trade promotion acceptance, each of the five variables examined had statistically significant main effects. Of the two-way interactions, Brand Share - Relationship with the Vendor Firm and Trade Discount - Relationship with the Vendor Firm, had statistically significant results.