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164) A trade promotion is a physical product sent as part of a promotional deal.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
165) Consumer promotions are for end-users while trade promotions are for channel members.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
166) A trade incentive is a financial incentive given to channel members to motivate them to
make a purchase.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
167) An off-invoice allowance is money paid to a retailer who is willing to bypass wholesalers.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
168) The most controversial form of trade allowance is an off-invoice allowance.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
169) Slotting fees are funds charged by retailers to stock new products.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
38
170) One reason retailers use slotting fees is that retailers must spend money to add new products
to their inventory.
Question Tag: Definition (Concept)
AACSB Category: Reflective thinking
Objective: 12-4
171) Retailers believe charging slotting fees forces manufacturers to test products before launch
to reduce the number of poor product introductions.
Question Tag: Critical Thinking
AACSB Category: Reflective thinking
Objective: 12-4
172) Manufacturers consider slotting fees to be fair because the fee is paid upfront and
encourages retailers to place the product on store shelves.
Question Tag: Critical Thinking
AACSB Category: Reflective thinking
Objective: 12-4
173) Unsuccessful products that do not sell and are taken off the market may be charged exit
fees.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
174) Only a small number of retailers charge slotting fees compared to the large percentage that
use exit fees.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
175) One of the disadvantages of trade allowances is that nearly half of the time retailers do not
pass along the allowance to consumers.
Question Tag: Critical Thinking
AACSB Category: Reflective thinking
Objective: 12-4
39
176) Diversion is purchasing extra inventory while it is on-deal so it can be sold later when it is
off-deal.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
177) Diversion is purchasing extra inventory while it is on-deal and shipping it to other locations
where it is off-deal.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
178) A diversion is a form of exit fee where funds are transferred from failing products to
successful products.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
179) Trade contests encourage sales by making rewards and prizes available to brokers,
salespeople in retail stores, wholesalers, and agents.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
180) Rewards given as part of a consumer contest are also known as spiff money.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
181) Spiff money refers to cash, not prizes, paid to consumers in sales contests.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
40
182) A trade incentive involves a retailer performing a function in order to receive an allowance.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
183) A cooperative merchandising agreement is a formal agreement between the retailer and the
manufacturer to undertake a two-way marketing effort.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
184) Cooperative merchandising agreements are popular with manufacturers because the retailer
performs a marketing function in order to receive an allowance or incentive.
Question Tag: Critical Thinking
AACSB Category: Reflective thinking
Objective: 12-4
185) A calendar promotion allows a manufacturer to set a schedule among competing brands of a
product so that the manufacturer can feature one of the brands on sale almost all of the time.
Question Tag: Definition (Concept)
AACSB Category: Reflective thinking
Objective: 12-4
186) Offering Coke on sale one week, Pepsi the next week, and 7UP the following week can be
planned out using a calendar promotion program.
Question Tag: Critical Thinking
AACSB Category: Reflective thinking
Objective: 12-4
187) A premium or bonus pack trade promotion offers retailers a reduced price if they purchase a
greater volume of merchandise.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
41
188) For retailers to receive co-op advertising dollars from a manufacturer, there cannot be a
competing brand in the advertisement.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
189) In cooperative advertising programs, retailers accrue co-op advertising monies based on the
size and number of ads.
Question Tag: Definition (Concept)
AACSB Category: Reflective thinking
Objective: 12-4
190) Co-op advertising programs allow retailers to use the manufacturer's dollars to expand
advertising programs.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
191) From a manufacturer's perspective, co-op advertising is beneficial because the payments are
almost always tied to sales.
Question Tag: Critical Thinking
AACSB Category: Reflective thinking
Objective: 12-4
192) From a manufacturer's perspective, a trade show offers the potential to meet customers and
sell products.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
193) From a manufacturer's perspective, a trade show allows sellers to compare merchandise and
to make contacts with prospective channel members.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
42
194) In the United States, few deals are finalized during trade shows. Instead, exhibitors collect
business cards and follow up later after the show is over.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
195) A trade show participant from another country is more likely to be ready to make a purchase
than a domestic attendee.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
196) Regional niche trade shows are losing customers to national and international trade shows.
Question Tag: Definition (Concept)
AACSB Category: Reflective thinking
Objective: 12-4
197) What are the main types of trade allowances? Describe each one.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
198) What are the disadvantages of trade allowances?
Question Tag: Critical Thinking
AACSB Category: Reflective thinking
Objective: 12-4
43
199) Name and briefly describe the types of trade incentives that are offered.
Question Tag: Definition (Concept)
AACSB Category: Application of knowledge
Objective: 12-4
200) A major concern in using trade promotions is that merchandise will not move unless a trade
promotion is offered. For example, in the grocery industry, the majority of manufacturers offer
some type of trade promotion to get retailers to make purchases.
Question Tag: Critical Thinking
AACSB Category: Reflective thinking
Objective: 12-5
201) If manufacturers try to quit or cut back on trade promotions, retailers often replace the
manufacturer's brand with other brands or trim shelf space to allow more room for brands that
are offering better deals.
Question Tag: Critical Thinking
AACSB Category: Reflective thinking
Objective: 12-5
202) Retailers tend to stock brands with strong images even if the manufacturer offers fewer
trade deals.
Question Tag: Critical Thinking
AACSB Category: Reflective thinking
Objective: 12-5
44
