Changing the Channel: Better Way To Do Trade Promotions Harvard Case Solution & Analysis

In theory, trade stocks should benefit all participants. In practice, however, the manufacturers and retailers often use stock trading as a weapon in the zero-sum game, and users sometimes leave completely. This need not be so. Over the last three years, David Bell, a marketing professor at the University of Pennsylvania Wharton School, and Dr. Xavier r e, a visiting assistant professor of marketing Anderson School of the University of California, studied theoretical and practical issues related to trade promotions, and they explain how the right kind of deal can be made - a transparent system, which generates mutual trust and benefit both producers and retailers. The key is proper conduct that is still poorly understood instrument: pay-for-performance trade promotion where retailers receive remuneration according to how much they sell, not how much they buy. The authors explain how the most common ways to share today - which rewards retailers to effectively purchase, and not an effective marketing - creates various flaws that drain resources from their intended purpose. Using a hypothetical case involving such a simplified mathematics, they go on to demonstrate how manufacturers can develop a pay-for-performance options that retailers can take. They also show how one national company beverage made pay-for-performance proposals into practice. Finally, they offer practical advice to help executives to reconsider elements of organizational culture that stand in the way of a more effective approach to trade promotions -., And, as a consequence, block better, more profitable relationships throughout the channel "Hide
by David R. Bell, Xavier Dreze Source: MIT Sloan Management Review 10 pages. Publication Date: January 15, 2002. Prod. #: SMR369-PDF-ENG

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