Question

What are the reasons that a company gives trade discounts?

What are the reasons that a company gives trade discounts?

Homework Answers

Answer #1

Following can be the major reasons that a Company gives trade discounts:

  1. To increase sales: The primary reason of giving trade discount is to rise up the sales volumes, customers get attracted when the vendors are giving discount products and they buy more quantity from such vendors.
  2. Improve customer relationship: Few organizations find it as strategy to build strong relations with customers in initial period they give trade discounts so the customers come to them and over the time passes they become loyal to vendors.
  3. To hide true prices from competitors: The Company shows the prices of products after different rate of trade discounts for different products it helps them to hide the original price of products from competitors.
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