To evaluate a trade promotional idea initiated by P&G,Loblaw's (the grocer)should NOT consider:
A) The realized margin from the promotion
B) The cost of the additional inventory carried due to buying more than the normal amount
C) The potential loss suffered when customers switch to the promoted merchandise from more profitable private-label brands
D) The additional sales made to customers attracted to the store by the promotion.
E) The retailer should actually consider all of these

Question

Quizplus · Accepted Answer

To make an informed decision about whether to participate in a trade promotion with P&G, Loblaw's should consider all of the listed factors. The realized margin from the promotion and the additional sales made to customers attracted to the store by the promotion will contribute to the financial impact of the promotion. However, Loblaw's must also consider the cost of carrying additional inventory and the potential loss suffered when customers switch from more profitable private-label brands to the promoted merchandise. Examining all of these factors will give Loblaw's a complete picture of the potential costs and benefits of the trade promotion.

To Evaluate a Trade Promotional Idea Initiated by P&G,Loblaw's (The