DEALER INCENTIVE TOURS BUSINESS WORLD 08/08/1995 Submitted By: Sumedha Nanda 10DM-159.
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Transcript of DEALER INCENTIVE TOURS BUSINESS WORLD 08/08/1995 Submitted By: Sumedha Nanda 10DM-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
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.