What is a Trade Scheme?

The normal terms of trade is that every trade partner in the chain(Distributor, Wholesaler, Retailer, etc) make a certain pre defined margin on each product they make. This margin is the gross profit of the trade partner. Trade scheme is an additional monetary benefit that is given to the trade partners. This additional margin is usually structured around a time period which can range from a few days to an year. A few forms a trade scheme might take are as follows.
  • Flat discount – Reduction in purchase price leading to higher profit per sale
  •   Progressive discount – Higher reduction for higher purchases which encourages partners to sell higher amounts of products
  •   Free items – Giving additional products for the same price
  •   Lucky draw – A few lucky retailers stand to earn big rewards
  •   Slab based rewards – Similar to progressive discount but rewards instead of discount

Trade schemes are tools in the hands of a brand to ensure that the trade partners are encouraged to sell more of their products. Designing a trade scheme which would attract trade partners to sell more of a brand’s products is the most important aspect of a Sales manager’s job.

Topics: Loyalty Programs

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