Discounts for rejecting competitors' products, Discounts...

Discounts for rejecting the goods of competing firms

One of the new varieties of discounts in recent years has been a discount for the rejection of the products of competing firms, which has turned into a powerful, but quite dangerous weapon of marketing wars. Such a discount is provided by the manufacturer of the goods to retailers or catering establishments, if they agree to refuse to trade the goods of competing brands and sign an agreement on exclusive purchases.

Within the framework of such a contract, the manufacturer of the product or its dealer:

- guarantees the store (restaurant, etc.) a particularly low wholesale price;

- introduces an additional bonus for each unit of product sold;

- sets up a flexible delivery schedule;

- increases the commodity credit.

Sometimes such agreements also provide for additional advertising campaigns for the brand and training of store personnel. In return, the counterparty requires only one thing: to refuse to buy a brand - a competitor.

In the West, companies are actually limited in their impact on retail, which aims to squeeze out competitors. But the owners of supermarkets, restaurants and other outlets are free to choose an assortment, and if they want to trade with a single brand, it can not be forbidden to them. It can be assumed, of course, that some supplier will want to collude with the sales point. But on this score there is anti-cartel legislation. For example, not so long ago, several European companies engaged in the production of wall panels, agreed that they will supply products to wholesalers at certain prices. As a result, they fell under a huge fine (over $ 400 million).

Discounts for true or prestigious buyers

A special type of discount that occurs in commercial practice is discounts for true or prestigious buyers. Such discounts, as can be seen from their very name, are given to buyers who:

- or regularly make purchases in this firm for a long period of time;

- Or belong to the category of "prestigious", which allows you to use the fact of buying them for this product for its advertising.

These discounts are provided on a purely individual basis and can be issued, for example, in the form of personalized customer cards. Such cards have now been issued by many European food supermarkets.

Regarding discounts for prestigious buyers, they are often not advertised and remain a secret of bargaining between the seller and such a buyer. The reason for such secrecy is the fact that this kind of discount is a blatant manifestation of price discrimination. Meanwhile, the legislation of many countries categorically prohibits price discrimination. Elements of this prohibition are also present in United States legislation: they are the US Tax Code and the Consumer Rights Protection Act. While this legislation in our country is not very active, it is impossible to forget about this aspect of the formation of discounts. Therefore, businesses need to mask

they use discounts of this kind and come up with economic reasons why their use should not be considered price discrimination.

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