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Promotions are a powerful sales tool, but they usually cost money. For suppliers, the natural hope is to spend less and achieve more. So, how to spend as little as possible while achieving the best promotional effect is what every manufacturer hopes for. Because retail promotion resources are scarce, retailers will try every means to raise the 'threshold' for promotions to extract more benefits from suppliers. Therefore, regardless of whether the supplier's promotion itself has financial support, the retailer's buyer will assume that the supplier has funds available. This is both a negotiation strategy and a technique. As a supplier, you must design your promotion plan from the other party's interests. You can use 'limited quantity' to stimulate the buyer's expectations for the promotion and use 'exchange' methods to reduce your own costs. Specifically, suppliers can achieve this through the following steps:
The 'Limited Quantity' Approach
From the perspective of the law of value, the value of an item is inversely proportional to its quantity. That is, the scarcer the item, the higher its value. Conversely, the lower its value. This applies to promotions as well. Therefore, suppliers should enhance the value of the promotion by limiting the quantity. There are several forms of limiting quantity:
1. Limited Product Quantity
Increase the value of the promotion by limiting the quantity of products that enjoy the promotional policy. For example, limit the quantity of promotional bundles to enhance their value. Let the retailer know that the products are not abundant; they cannot have as many as they want. Instead, tell them that the promotional bundles are very limited and will soon be gone. The fundamental purpose of a promotion is to boost sales, and of course, the product is the most important; good products lead to high sales. As the saying goes, 'What is not fought for is not sweet,' and this applies to promotions as well. If necessary, suppliers can even create a 'false impression' of a rush to grab the goods—since the goods are 'fought for,' will the retailer still charge fees? Let them grab the goods first and talk later.
2. Limited Retailer
Different retailers compete for benefits. As competitors, both sides will naturally try to secure favorable promotional resources. By limiting the retailers, you can easily stimulate competition among them. Since other retailers are doing it, they will want to do it too, preferably having it while others don't! They will try to get more quantity. At this point, the supplier can further encourage competition by saying, 'Such good products can be sold by anyone, but only good retailers get them. Since we have a good relationship, I'll give them to you as a favor. The company doesn't make money on these, so if you charge a fee, we can't sell them.' This guides large retailers to make decisions favorable to you. In this way, retailers may sometimes waive fees to get good products.
3. Limited Stores
Even within the same system, different stores compete. If other stores secure promotional policies but one doesn't, it's a matter of 'losing face' for that store. Competition among small interest groups within a system can sometimes be even fiercer than competition between different retailers. So, don't try to conquer the whole system at once; picking them off one by one is also a good strategy.
Using the limited quantity approach highlights the scarcity of promotional resources and enhances the perceived value of the promotion. If you can negotiate no fees, that's best. If there are still related investment requirements, you can use the 'exchange' approach to control costs.
1. Exchange with Gifts
In promotions, any retailer's buyer will value the discount intensity of the promotional items. Low price is an important requirement for buyers, but not the only one. Unless you can offer a 50% discount, ordinary price reductions may not satisfy buyers. At this point, you have two options: one is to lower the price and then give a promotional fee; the other is to give no money but a batch of high-value gifts. Price reduction plus gifts is a more attractive discount and has a more obvious effect on sales. The key to using gifts instead of promotional fees is the selection of gifts and the demonstration of their value. You must make the buyer feel an impulse to prefer your gifts over fees. If the gifts are well-chosen, novel, and of significant value (value, not price), the buyer might even agree to no fees and no price reduction, and even proactively put up posters and give you end caps—anything is possible!
2. Exchange with Activities
Remember, the forms that bring benefits to retailers are not limited to money and goods; good activity formats can also bring benefits. For example, activities that gather crowds and drive sales of other categories in the store. Especially activities like 'roadshows,' 'live demonstrations,' and 'knowledge lectures' that easily attract consumer participation. Their lively format not only increases foot traffic but also enhances the store's image, catering to the 'face' concept of the store and the buyer. Many large manufacturers use this tactic.
3. Exchange with Physical Items
Generally, many suppliers have physical resources on hand. These resources may just sit there without generating value. But for retailers, they might have special utility. For example, during summer promotions, retailers often have outdoor lottery events, where sun umbrellas are necessary. If the supplier can learn about this need in advance and use it as a condition for the promotion exchange, it might be a win-win. Don't look at what the item is; as long as you have it and they don't, and they need it, your junk can be their treasure and bring you added value. Use resources wisely!
4. Exchange with Special Display Props
Often, we see display props designed by some brands that are not only modern but also elevate the brand's image. This is an excellent opportunity for both the brand and the retailer to enhance their image. Retailers want to lead in store image, customer experience, and sales models. If a supplier can provide resources to achieve this, they will be happy to cooperate. You should let the buyer know that these props are well-made to support the store's sales and image; the cost is high, so the quantity is limited, and not every store can have them. Make the display props a bargaining chip to get what you want!
Negotiation Strategies Between Suppliers and Large Retailers
In addition to the above methods, the way suppliers negotiate with retail buyers also greatly affects the cost of promotions.
Discuss the Promotion First, Then Fees
As a supplier, always remember: the promotion plan itself is the core point of negotiation with the retailer, not the fees. That is, always prioritize the negotiation of the promotion plan over money. Many suppliers get this wrong and put the fee issue above the promotion plan. That's why they get caught by the buyer, who clings to fees and won't let go.
Use Your Strengths to Attract the Buyer
If you are confident that your product price and promotional activities are attractive to the retailer, then don't bring up fees proactively. You can even use the value of the plan itself to secure favorable promotional resources from the buyer. In short, fees are just a supplementary tool for the promotion plan; they should only be used as a means to win over the buyer when the plan itself is not attractive. Remember, if your promotion plan is attractive enough to the buyer, they will proactively arrange free promotional displays for you to boost sales.
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