Trade Allowances

The video tutorial discusses the complexities of setting a product price and introduces trade allowances as a strategy to fine-tune pricing. Trade allowances are discounts given to wholesalers or retailers to promote and sell products. The video covers different types of trade allowances, including advertising allowances for product promotion, stocking allowances for product placement, and commissions to motivate sales. These strategies help achieve desired sales and market share.

What is the primary challenge mentioned in setting a product's price?

• Finding the right suppliers

• Determining the base price

• Choosing the best marketing strategy

• Deciding on the product features

What is a trade allowance primarily used for?

• To increase production costs

• To reduce product quality

• To offer discounts to consumers

• To incentivize wholesalers and retailers

What is an advertising allowance?

• A discount for retailers to advertise products

• A bonus for salespeople

• A discount given to consumers

• A fee paid to manufacturers

What is the purpose of a stocking allowance?

• To offer a refund to consumers

• To encourage retailers to stock a product prominently

• To reduce the cost of production

• To increase the price of the product

How do commissions function as a trade allowance?

• By reducing the product's base price

• By paying salespeople for each unit sold

• By increasing the retailer's profit margin

• By offering discounts to consumers