11 Major Pros and Cons of Trade Promotion

Trade promotion is a marketing technique that is aimed at increasing the demand for products in retail stores based on special pricing, display of the products, demonstrations, and bonuses.

For example when a company decides to bring promotion whereby when you buy one you get one free. It is necessary in that there is the production of goods in order to satisfy consumer needs.

Pros and Cons of Trade Promotion

Pros of Trade Promotion

  1. It increases sales

When a good is put on promotion it increases the demand for the good hence a lot of consumers will be able to buy the good.

  1. Promotes competition

Trade promotion of one product makes it possible for other companies to organize for the trade promotion also because they will be competing with others in terms of sales hence benefits the consumers as they will be able to get a variety of goods.

  1. It is effective

Trade promotion is an effective way of marketing a product because someone is in a position to request for something in return for the discount.

  1. It is efficient

When doing it for retail execution, the level of promotional discounts and other types of discounts can vary.

  1. Able to move quickly and easily

With trade promotion, it is able to change prices quickly without the expense and time for an official price list. This makes it a better method of marketing because once the product is on-demand it will take a little time for the company to set their prices hence making profit.

Read More: Pros and Cons of Trade Fairs

Cons of Trade Promotions

  1. It requires a lot of effort

Trade promotion creates a lot of work for people working in the company because they have to use a lot of effort in convincing people how good the product is.

  1. The company may run at a loss

The trade may be so good during the promotion but it may not maintain the status hence may make the company run at a loss since they used a lot of resources during the promotion.

  1. It is a more complex way of marketing

Using this method to market prices are managed more with discounts and allowances that need to be communicated earlier. It can create a reduction in the number of customers which can really affect the cash inflow of the company.

  1. Not good for big businesses

Small companies are easy to organize very many trade promotions because it may be easy for them to manage the workload that comes with it. Hence trade promotion is not a very good way of marketing a product.

  1. Needs careful planning

Trade promotions need to be planned well or else they will have a negative impact on the company. They need calculation of the expenses and the intended profits.

  1. It needs the employment of some other professionals

It may require the company to employ some other professionals that will have to ensure that the operation of the promotion is smooth. The company may be required to employ professionals such as accountants and marketers.

Read More: Pros and Cons of Trade Restrictions

Summary

Trade promotions may be good at times if well organized and may also turn out to be disadvantageous to the company. Although many companies adopt the method, it has its own drawbacks.

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