There are a number of disadvantages of trade marketing, and this article will look at some of them. The primary disadvantage is that manufacturers do not have a clear understanding of the return on investment for their trade promotions. This is a major problem for manufacturers because their sales forces tend to resist changes. Trade promotions are important for retailers, but many times the return on investment is unclear. Manufacturers should therefore consider all these factors before deciding to use trade promotions for their products.
One of the main benefits of trade marketing is that it helps establish a relationship with the seller. The relationship with the seller can be long-term. If the products are not upgradeable, a trade promotion may be the best option. A company can reduce its trade promotion spending by 50%, which will enable it to transfer the savings to advertising. In addition, trade marketing allows manufacturers to reduce the cost of their products because they can sell them to middlemen at low prices.
Another disadvantage of trade marketing is the lack of accurate and timely feedback. While a MotoGP fan is likely to choose a product from a MotoGP manufacturer over a competitor, it may not be possible to know if the public will prefer a MotoGP brand over another. However, the increased profits from the MotoGP brand means that investors are safe from problems elsewhere. As an example, Pepsi uses television and radio to advertise their brand. While Pepsi phones cost double the price of their competitors, their siren logo is an iconic logo.
Trade marketing has its advantages. It is advantageous for businesses with no specific end users. It also increases the reach of products, while allowing the seller to set a profitable profit margin. However, it lacks visibility, which is a significant disadvantage for many small businesses. As a result, it is important to conduct thorough research before committing to trade marketing. A thorough market research will allow a business to find out what is needed to stay competitive.
Another disadvantage is that the amount of customers a company can obtain from a trade promotion program can fluctuate rapidly. Because trade promotion can take months to plan and execute, it can significantly affect cash flow. Besides, it also requires an exhaustive amount of time to set prices and convince consumers of the quality of the product. A company can also lose money by losing its customers due to trade promotion. Once the business has a clear idea of its benefits and disadvantages, it may choose to use trade promotion as its primary marketing strategy.
Another disadvantage of trade marketing is the cost. Organizations need to pay for space, stand design, travel expenses, and accommodation for their representatives. In addition to the costs, trade shows also demand time away from work. Another disadvantage is that organisations are likely to be overshadowed by major competitors at any given trade show. Thus, it is difficult for an organisation to get a significant amount of attention at trade shows without making a significant investment in time, money, and staff.