---
title: "Six Objectives of Trade Promotion and How to Approach Them"
description: "Promotion is a key competitive tool, so it must be planned strategically, starting with clear objectives. This article discusses six common objectives for trade promotions—achieving distribution targets, increasing sales, launching new products, clearing inventory, managing seasonality, and responding to competition—and outlines corresponding channel policies and approaches."
author: "芮新国"
publisher: "New Distribution"
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published: "2014-09-15"
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# Six Objectives of Trade Promotion and How to Approach Them

> Promotion is a key competitive tool, so it must be planned strategically, starting with clear objectives. This article discusses six common objectives for trade promotions—achieving distribution targets, increasing sales, launching new products, clearing inventory, managing seasonality, and responding to competition—and outlines corresponding channel policies and approaches.

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Since promotion is an important means for enterprises to participate in competition and achieve set goals, it is necessary to plan promotions from a strategic height. The primary task of promotion planning is to clarify the purpose of the promotion; different purposes require different promotion policies. Only by formulating corresponding promotion policies and plans based on clear objectives can the set goals be successfully achieved. Looking at the myriad promotional activities around us, how many are truly strategic, purposeful, planned, and creative?

The target of promotion can be end consumers or channel members. Different targets require different promotional methods. Promotions aimed at channel members (agents, wholesalers, retailers, etc.) are an important part of a company's channel promotion strategy. Generally, there are six objectives for channel promotions: achieving distribution rate targets; increasing sales; launching new products; clearing inventory; seasonal adjustments; and responding to competition. This article will discuss the channel policies corresponding to each of these six objectives.

**1. Achieving Distribution Rate Targets**

A key indicator of product promotion success is the “distribution rate.” During the product launch stage, a certain distribution rate is crucial for product promotion, advertising coordination, and market stabilization. To ensure the distribution rate target is met, companies need to build, expand, or adjust their distribution network according to plan. Typically, companies can adopt the following practices (see Table 1):

**Table 1: Achieving Distribution Rate Targets**

**2. Increasing Sales**

After achieving a high “distribution rate” in the relevant market, the main goal shifts to increasing market share. At this point, the promotional objective changes from achieving distribution targets to increasing sales (i.e., increasing distributor orders to obtain expected profits). Common methods to achieve this goal include the following (see Table 2):

**Table 2: Increasing Sales**

**3. Launching New Products**

Due to the diversity and variability of customer needs, companies often need to introduce new products to the market in a timely manner. During the new product launch process, companies need to conduct extensive publicity and formulate corresponding sales policies. In the process of launching new products, it is essential to manage the relationship between old and new products (conflicts and competition). Common approaches to handling the relationship between old and new products include the following:

**Table 3: Relationship Between Old and New Products**

**4. Clearing Inventory**

Due to constraints such as production scale, transportation, and warehousing, companies need to periodically clear inventory. Large-scale inventory clearance may disrupt the market price system and reduce profits. However, if channel resources are cleverly utilized during inventory clearance, it can also expand market share.

For example, Ting Hsin (Master Kong) once conducted a large-scale promotion to clear inventory of “Master Kong” instant noodles. To transfer large amounts of inventory to distributors and simultaneously push distributor inventory to retail stores, Ting Hsin took inventory counts from distributors and offered discounts to entice retailers to stock up, thereby reducing wholesaler inventory and encouraging wholesalers to order more. This promotion not only quickly boosted “Master Kong” sales but also avoided a huge inventory cost. Common approaches to handling corporate inventory include the following (see Table 4):

**Table 4: Clearing Inventory**

Changing current sales policies is generally adopted when competitors hold a significant market share and have strong influence over the channel and the entire market. Companies may be forced to adjust to maintain their competitive advantage.

Keeping existing sales policies unchanged is generally adopted when competitors have a small market share and minimal impact on the channel and market. In such cases, the company's market position is relatively high, and its control over the channel is stronger.

**5. Seasonal Adjustments**

Sales of products in some industries are affected by seasonal factors (typical examples include air conditioners, cold drinks, gifts, etc.), due to product characteristics and changes in consumer demand. Different products have different peak and off-peak seasons. Companies must not only analyze the seasonal trends of their own products but also those of competitors and the industry. Seasonal sales adjustments can be analyzed in four stages: peak to off-peak; off-peak; off-peak to peak; and peak (see Table 5).

**Table 5: Seasonal Adjustments**

**★ Off-peak to Peak**

A typical example is the cold drink industry. Sales of cold drinks are highly seasonal. In the early stage of entering the off-peak season, distributors often stop ordering early, causing a rapid decline in sales. At this time, channel promotions can slow the decline, extend the sales period, and even encourage distributors to stock up. This allows companies to recover funds, reduce inventory pressure, occupy channel resources to prevent competitors from entering, and prepare for distribution so that products are “hot” when the peak season arrives.

**★ Peak to Off-peak**

A typical example is the air conditioning industry. Air conditioners are highly seasonal. To achieve market share targets, companies often offer various preferential policies to the channel. For example, to encourage distributors to stock up before the peak season, companies often use a “monthly incremental” discount policy (i.e., increasing discount rates month by month as the peak season approaches to stimulate distributor orders).

**6. Responding to Competition**

Competitors' market actions are an important factor in formulating promotion policies. When there are few manufacturers in an industry, a few companies hold most of the market share (high market concentration), product differentiation is low, and consumers have considerable awareness and knowledge of the market, analyzing competitors' market behavior becomes particularly important. The following are competitor behaviors and corresponding response policies (see Table 6):

**Table 6: Responding to Competition**

It should be noted that the purpose of channel promotions must be consistent with the overall marketing strategy. Promotion is a double-edged sword—"killing 10,000 enemies at the cost of 3,000 of your own." When promoting, it is essential to adhere to the principle of "not harming the overall strategy (brand strategy, channel strategy, etc.)" and to grasp the "degree" of promotion, using this "marketing weapon" cautiously. In any case, harming brand image or overall strategy for a slight increase in sales is not worth it. The above content covers the six objectives (motivations) of channel promotions and introduces some common approaches for companies to conduct channel promotions. This article does not delve into specific promotional methods because companies, products, and strategies differ, and corresponding promotional methods also differ.

Additionally, before determining specific promotional methods, companies should conduct thorough market research and promotion planning, and communicate fully with distributors before implementation. Only in this way can promotions proceed orderly and gain distributor cooperation and support, and only then can all predetermined goals be achieved.

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