Improving trade promotions through virtual forward buying

Abstract

Purpose

The purpose of this paper is to propose a virtual forward-buying model that allows for forward buying but reduces the channel cost with no major behavioral change on the part of manufacturers and retailers.

Design/methodology/approach

Using simulations, the authors compare the proposed virtual forward-buying model with the traditional forward-buying and everyday-low-price approaches.

Findings

The authors find that the proposed model leads to lower overall channel costs that are shared equitably between both the manufacturer and the retailer.

Research limitations/implications

No primary or secondary is used, a situation that is usually very difficult to find in this area.

Practical implications

The paper presents a new method to improve trade promotion efficiencies that does not require a drastic change of habits for either the manufacturer or the retailer; allows the practice of forward buying to continue; and leads to channel cost reductions for both parties.

Originality/value

The paper presents research in an area that is under-researched due to lack of data.

Citation

Poddar, A. and Donthu, N. (2013), "Improving trade promotions through virtual forward buying", Journal of Business & Industrial Marketing, Vol. 28 No. 1, pp. 16-28. https://doi.org/10.1108/08858621311285688