DEALER INCENTIVE TOURS BUSINESS WORLD 08/08/1995

Submitted By:

Sumedha Nanda10DM-159

An incentive program is a formal scheme used to promote or encourage specific actions or behavior by a specific group of people during a defined period of time.

Can be- Points-based incentive programs Employee incentive programs Consumer incentive programs Dealer incentive programs Sales incentive plan(for sales agents)

Dealer incentive programs

With umpteen brands fighting for shelf space companies are trying to lure dealers by offering more and more incentives to dealers

Dealer incentive programs are used to improve performance for dealer and channel resellers using sales incentive programs.

Rewards can be: Cash Gift Coupons/vouchers Merchandize Travel

The most effective one for maintaining long term relationships is ::Travel

Examples

Farm pesticide firms

To push sales, farm pesticide firms offer foreign trips to dealers

Free tour to Italy, Switzerland, Thailand, Singapore, Malaysia, Australia are just a few of the alluring offers which the companies have extended to the dealers

Higher the sale, better will be the destination of tour, say the promotional offers.

For example-Nagarjuna Fertilizers ::If they sell 500 kg of a particular product, they get four night-five day stay in Thailand for free.

Saab Cars- Tour de France

Same concept is being used internationally

Started with the guys at Saab Germany catching on

Current tour of Saab dealers to france was a huge success

Saab conducted promotional event in france with its dealers where people could ride the newest versions and compare with other brands.

All that is Spent

Type% of Total

Estimated Expenditure

(expressed in $ billions)

Consumer/User Promotions

16% $4.3

Sales Incentive — Merchandise

15% $4.0

Sales Incentives — Travel 18% $4.7

Dealer Incentives — Merchandise

16% $4.3

Dealer Incentives — Travel

15% $4.0

Non-Sales Employee — Merchandise

9% $2.5

Non-Sales Employee — Travel

4% $1.1

Business Gifts 7% $2.0

Total 100% $26.9

All that is Spent--Travel

Konica Locations: Germany,Africa Amount:Rs 40,000 per head

Godrej-GE Locations: US,Germany Amount:Rs 4 crore

Videocon Locations: London,Paris Amount:Rs 35,000 per head Number of Deaers taken :650

How to benefit on tour

Godrej-GE top brass flew to Kenya where their dealers were on a company sponsored tour to make a presentation on company’s plans to launch a new range of products.

Tour is one place where you can get complete attention of the dealers.

Apart from sight-seeing companies are adding activities like factory visits to Dealer’s itinerary.

Advantages

It can motivate the staff which in turn only helps business.

It helps boost morale and increase loyalty

It helps build long term relationship with dealers

Advantages

These programs help companies in Capturing market share Launching new products Reducing cost of sales Increasing product adoption Driving sales

Disadvantages

Incentive tours will very often create moral hazards. By giving the incentive of hitting specific targets, the targets become the goal, rather than raising the performance of the organization as a whole. This causes reduction in overall performance, even while increasing the rate of hitting targets.

Slowly this has turned from a differentiation point to a Point of Parity.

Costs much higher than other incentives like Diwali bonus etc.

Thankyou