Promotional allowance means reduction of the wholesale price as an incentive to retailers or middlemen. A promotional allowance compensates the retailer for expenditures made promoting the product.
Promotional allowances are offered by manufacturers to support the additional promotional activities undertaken by channel members (retailers) on their behalf, e.g. discounts given as part of promotional programs, such as when products are put on sale to increase traffic in a retail store.
This involves reduction of the trader prices or wholesaler prices so as to incentive or motivate the retailer to spend on advertising or promoting the product in his particular area according to the specific needs of the area.
This also serves to provide greater margins to the retailer so that he focuses on pushing the company’s product more than the competitor’s.
Promotional allowances are offered by manufacturers to support the additional promotional activities undertaken by channel members (retailers) on their behalf, e.g. discounts given as part of promotional programs, such as when products are put on sale to increase traffic in a retail store.
This involves reduction of the trader prices or wholesaler prices so as to incentive or motivate the retailer to spend on advertising or promoting the product in his particular area according to the specific needs of the area.
This also serves to provide greater margins to the retailer so that he focuses on pushing the company’s product more than the competitor’s.