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Co-op Advertising & Trade Promotion Terms

Co-op Advertising & Trade Promotion Terms

30 Day Rule
FTC rule, which requires that mail-in offers for which the consumer has submitted payment must be shipped within the time promised or 30 days if a time is not stated. If shipment cannot be made within the required time, the supplier must notify the consumer of the delay and offer the opportunity to cancel the order.

A

Accrual
An allowance accumulated by manufacturers or suppliers of co-op and other trade allowances for their retail and /or wholesale customers, generally calculated as a percent of the invoice price of products sold to the retailer or distributor. Can be based on current years purchases, or prior years.

Advertising Allowance
A payment or service by a manufacturer of goods to a merchant for advertising a product of the manufacturer.

Allocation
A pre-assigned quantity of merchandise to be made available or sold to an individually designated area or customer.

Allotment
Pre-determined distribution of product for which the demand often exceeds the supply. Also, the total amount available of a particular special pack in a particular area or to a particular customer.

Allowance
A temporary price reduction or discount offered to the retailer by the manufacturer. Sometimes given in the form of free goods, like one case free with twelve.

Automatic Distribution
Distribution of goods by a wholesaler or by the headquarters of a chain to individual retail stores without a specific order; usually done on a guaranteed-sale basis.

Best Food Day
The day on which a newspaper runs editorial material on food, making that day’s edition the most advantageous for retail grocers’ advertising and hence, for the advertising of food manufacturers; usually Wednesday evening or Thursday editions, depending on the market.

Billback Allowance
A merchandising allowance in which the discount is not given to the retailer until he provides proof he has complied with the merchandising requirements of the seller.

Borrowed Interest Promotion
A promotion that uses the recognition and/or impact of a well-known event or personality to capture the attention and interest of the target audience.

Bounce Back
A second promotion offer made to consumers in order to encourage additional purchases; e.g. a coupon for a second purchase placed within a product package, or a second offer of a different premium enclosed when the first premium is mailed.

Box-Top Offer
An offer of a premium based on the return of the box top from a package or other appropriate proof-of-purchase.

Break Even Calculation
A technique to determine the absolute or percent sales increase needed to pay for the cost of a promotion:

  • Total cost known Divided by margin per case Equals total volume needed
  • Unit costs known Divided by margin per case Less base volume Equals incremental volume needed

Buy-Back Allowance
An allowance that is based on the amount of product purchased on a preceding deal.

Carry Over
Orders written and recorded as orders but not yet recorded as shipments.

Case Allowance
An allowance by a manufacturer to a retailer. The allowance is proportional to the number of cases purchased, either continuously or in increments.

Case-Count Method
A form of acceptance of a wholesale delivery by a retailer on the evidence of the number of cases listed in an invoice rather than after a physical count of cases delivered.

Case Rate
A figure used commonly to indicate the marketing expenditure behind a brand by showing support per case sold. A brand’s case rate is determined by dividing its total annual marketing budget (advertising, promotion, etc.) by its total case volume.

Collection Promotion
These promotions require multiple purchases to participate. Many also have some minor reward for a single purchase.

Co-operative Advertising
Advertising run by a local advertiser in cooperation with a national advertiser. The latter usually supplies the copy, plates, or reproduction materials; the two share both the cost and the mention of their names.

Cooperative Association
A group of independent retailers who combine under a common name for purposes of purchasing merchandising.

Cooperative Coupons
A group of coupons that are delivered together in the same vehicle for increased efficiency or impact.

Cooperative Merchandising Agreement
A contract between a manufacturer and a retailer or wholesaler in which the manufacturer agrees to pay for specified merchandising services, such as featuring display, price reduction, etc.

Cost Per Return
A measure of the effectiveness of a communications medium in promoting a sales offer, contest, coupon promotion, etc. that invites a direct response from the public; computed by dividing the advertising/promotion cost involved by the number of returns.

Count and Recount Allowance
An allowance to a retailer or wholesaler paid for each unit of a manufacturer’s specified merchandise sold to customers in a stated period of time. Involves inventory at beginning of period (count) plus purchases and final inventory (recount) to determine retailer’s sales to customers during deal period.

D

Deduction
Generally an unauthorized reduction taken to the invoiced amount a manufacturer or supplier bills a customer. Often taken by customers who feel they have qualified for advertising or promotional allowances that have not been paid by the manufacturer or supplier. When taken, these unauthorized deductions create a tremendous administrative burden to resolve and cost both the supplier and the retailer unnecessary expenses in time and money.

Delivery Time
FTC rule, which requires that mail-in offers for which the consumer has submitted payment must be shipped within the time promised or 30 days if a time is not stated. If shipment cannot be made within the required time, the supplier must notify the consumer of the delay and offer the opportunity to cancel the order.

Direct Store Deliver
A delivery of merchandise from a manufacturer directly to a retailer rather than via a warehouse or wholesaler. Also drop shipment, store door delivery.

Display Allowance
A merchandising allowance granted to retailers in return for displaying merchandise, usually in special areas of the store in addition to regular shelf position.

Display Loader
A premium that is built into a display, and received free by the dealer when the display is taken down. Usually related to a consumer self-liquidating premium offer of the same item.

Distribution
The extent to which dealers carry a retail item; usually measured by either the percentage of all dealers who carry the item, or by the percentage of the total volume of business done by those who carry the item. The means by which a manufactured product reaches the customer including storage, transportation, sales, etc. and the way these elements are organized.

Distribution Allowance
A discount made by a manufacturer to a wholesaler or store chain to cover the cost of distributing a product, especially for the first time. Care must be exercised to prevent price discrimination, a violation of the Robinson-Patman Act.

Drive Period
A limited time period scheduled by a manufacturer or wholesaler sales organization for presenting deal and promotional terms to retail sales prospects, and consumers. Also promotion drive period, promotion period, canvass period.

Drop Shipment
Merchandise that is shipped directly from a manufacturer to a retailer, but is invoiced to a wholesaler, who in turn bills the retailer.

E

Effective Distribution
All commodity distribution after deducting out of stocks from total distribution. Also, net effective distribution.

F

Factory Pack
A special pack produced at the factory which requires some change from normal production procedure and occasionally can require different shelf space in the retail store.

Field Activated Promotion
A promotion initiated by a sales representative and a retailer store or store manager.

Forced Distribution
Automatic distribution of a product by retailers as a consequence of anticipated or actual customer demand created by advertising or consumer promotion. In test markets, automatic placement of products in panels of cooperating stores.

Free Standing Insert (FSI)
A preprinted advertisement in single or multiple page form that is inserted loose into newspapers, particularly Sunday editions and supplements.

Frontload
To schedule the use of the bulk of a budget for the first part of a planned promotion period; serves to assure that all of a budget is used for its originally designated ends.

H

Handling Allowances
An allowance from a manufacturer to a distributor or retailer for handling merchandise requiring special attention or display. (Must be offered to all competing retailers).

I

Instant Redeemable Coupon
A coupon placed on the outside surface of the package. The coupon can be removed easily without destroying the package and used as a price reduction on the current purchase.

In-Pack Coupon
A redeemable coupon enclosed in a product’s package for potential later use by the product’s buyer; may be redeemed on a subsequent purchase of the same product, or on a different product (cross coupon).

In-Pack Premium
A premium item enclosed inside a product’s package; usually offered with a full measure of product at no extra charge.

M

Manufacturing Representative
A sales representative of a manufacturer who may be either a salaried employee or a broker acting as an agent for several manufacturer’s agent.

Market Development Funds (MDF)
Advertising and/or promotional funds provided by manufacturers/suppliers to their customers that are offered to meet specific marketing objectives. Often requiring less complete proof of performance documentation than traditional co-op allowance programs, these funds are generally negotiated by a company’s sales force with their customers to meet competitive offers, respond to customer’s “vendor programs,” or to target funds to a specific geographical area or product emphasis. The laws regarding trade allowances, The Robinson Patman Act, apply to MDF programs, so a review by a company’s legal counsel is suggested before this type of program is implemented.

Merchandising Committee
A group of executives appointed by a store chain, wholesaler, or the like to decide on the acceptance of new products, manufacturer’s promotions, etc. Also buying committee.

Mint Condition
Coupons that appear gang-cut or carefully stacked. Coupons that are not soiled or dirty or even bent, wrinkled, or torn, and unlikely to have been properly redeemed.

N

Near Pack
A premium item offered free or for a discounted price with the retail purchase of another product, and positioned near to (but not touching) this product at the point of sale. Also near pack premium. A promotion making use of the near pack premium. Also near pack event. A container or receptacle used to hold and display near pack premiums.

O

Off Invoice
A deduction from an invoice from a manufacturer or wholesaler to a retailer normally made in exchange for the retailer’s promotional efforts. Also off invoice allowance or deal.

Outsert
Printed material attached to the outside rather than inserted into a package. Also, package outsert.

Performance Allowance
A rebate of a portion of the purchase price of goods provided to those retailers who agree to perform cooperative merchandising services such as advertising or display; paid after the retailer provides proof of performance.

Premium Container
A container for a retail product which is reusable after the original contents are gone, hence functions as a premium. Sometimes called a container pack.

Private Label
A wholesaler’s or retailer’s label bearing its brand name; Prize Reward given to winner in a contest, sweepstakes or chance promotion; also sometimes refers to salesmen’s incentive award, and official state lottery awards.

Promotion Allowance
A rebate or discount offered by a manufacturer or his agent to a wholesaler or retailer who agrees to promote the product purchased under allowance. Also merchandising allowance.

Purchase-with-purchase
An offer that allows the consumer to purchase an additional product at an attractive, reduced price. The reduced price is not available if the basic purchase is not made.

Push Money
A special reward given by manufacturers or service sources to agents’ or dealers’ employees, for encouraging the sale of their own goods rather than a competitor’s; usually paid on each sale, regardless of whether it is pushed or not. Abbreviated P.M., Spiff.

R

Redemption Rate
The actual or expected percentage of coupons/proof-of-purchase/etc. that have been used by consumers.

Robinson Patman Act
The laws that govern co-op and other promotional allowance programs. Enforced by The Federal Trade Commission (FTC) this Act is sometimes known as the “Meyer Guides.”

S

Slippage
Those people who purchase a product with the intent of claiming a promotion reward for such a purchase (e.g. send for a refund, or premium, or redeem a coupon), who fail to fulfill this intent; the ratio between such purchases, and purchases by those people who claim such a reward; usually stated as a percentage of total purchases. Also slippage rate.

Spiff
A special reward given by manufacturers or service sources to agents’ or dealers’ employees, for encouraging the sale of their own goods rather than a competitor’s; usually paid on each sale, regardless of whether it is pushed or not. Also known as Push Money.

Sweepstakes
A chance promotion involving the giveaway of products and services of value to a randomly selected group of those who have submitted qualified entries. To prevent infringement of lottery laws, such promotions do not require qualifying entrants to provide a monetary consideration, such as a purchase. The odds of winning depend on the number of entries received.

T

TPMA
The Promotional Allowance Association. The only not-for-profit trade association in the U. S. devoted to educating those involved with the creation and implementation of co-op advertising and other trade allowance programs. Formed in 1989, TPMA has grown to include over 100 major corporations, retailers, distributors, service and media firms. The Association conducts an annual industry conference in the Spring, and training seminars at other times in the year.

V

Voluntary Chain
A group of independent stores that combine under a common trade name for purchasing and merchandising purposes, often under the sponsorship of wholesaler. Also voluntary association, voluntary group, voluntary.

Voluntary Store
An independent retailer who is a member of a voluntary chain.

W

Warehouse Inventory Reduction Allowance
A specific payment offered to the trade for case of product moved from the warehouse to retail during a specified period of time. This allowance is measured on a Count-Recount basis.

Warehouse Store
A retail store, usually of large size, offering discount prices by means of eliminating or reducing such services as carryouts, deliveries, price marking of items, shelf stocking, etc.