Hot Fire: Service Your Best Parts
Terry Walsh is a research chemist who decided to develop his own top-of-the-line fuel injector cleaner. After two years in the laboratory, Terry formulated Hot Fire, a cleaner for both foreign and domestic automobiles. Now, Walsh needs a plan to advertise and sell his product in a market where he will be competing with other independent producers, backyard mechanics, and major brand companies such as STP, Gumout, and Dupont. According to Evans and Wherry (2011), “Trade promotion programs are pivotal to driving sales, building brand equity with consumers and strengthening channel partnerships” (p. 1). A well-executed trade promotions program will be instrumental in moving Hot Fire into national prominence.
Hot Fire Objectives * The first step in creating a trade promotions program is to establish objectives in order to guide subsequent marketing efforts and sales. The main trade promotions objectives for Hot Fire Fuel Injector Cleaner begin with the overall goal to drive consumer demand, increase sales, and build a reputable corporate image. In order to boost demand, a business must increase its product visibility and brand awareness. According to Clow and Baack (2014), “A strong brand image causes retailers to stock the product even when fewer trade deals are offered, because a strong brand by itself can help pull customers into retail stores” (p. 346). Establishing a brand marks a pivotal benchmark for Hot Fire where proper marketing strategies and advertising are essential for success. * Initially, Hot Fire must create a distribution channel by targeting auto repair shops, replacement part and auto supply retailers, convenience stores, and possibly race tracks. Once these relationships are established, the next objective is to attain prime shelf space with advertising to build the Hot Fire brand and further entice consumers to buy the fuel injector cleaner. Visual staging of products and ads is necessary for consumer brand recognition (Clow & Baack, 2014). By creating effective visibility and awareness, Hot Fire will be able to counter competitors and enhance channel relationships, further driving the company’s bottom line. * A number of challenges and obstacles that may hinder these objectives include competing with major companies, ensuring fair prices for consumers, and attaining and maintaining long-term retailer relationships and contracts. Major companies have an advantage because consumers already recognize their brand. Next, manufacturers can lose control of the pricing for their products once they sell to retailers. According to Clow and Baack (2014), “Costs are often passed on to consumers in the form of higher prices”. This price adjustment can deter consumers from purchasing the product. Lastly, research has shown that retailers favor short-term trade promotions (Poddar, Donthu, & Parvatiyar, 2013). This evidence confirms that manufacturers have to put forward a greater effort to keep their products in the marketplace.
Trade Promotions Program Design
After the objectives are set, Hot Fire must design a trade promotions program that will allow the company to build relationships with targeted buyers and drive customer demand. Hot Fire can attend auto trade shows and offer promotions to targeted buyers to learn more and potentially purchase the fuel injector cleaner. Before Terry Walsh begins offering promotions, he must first establish a trade promotions system and process that includes pricing charts, contracts and advertising materials. Hot Fire Fuel Injector Cleaner has a wholesale price of $17 per can. Terry hopes that dealers will not sell his product for more than $25 at retail value. In order to maintain his price and help increase consumer demand, Terry can develop contract with a price benefit chart that includes incentives for purchasing larger quantities of cleaner while setting restrictions on retail pricing. Contracts are a useful tool to ensure a mutual understanding when negotiating and agreeing upon prices. Hot Fire can offer several performance-based trade allowances and incentives to motivate retailers to sign such a contract.
Trade Allowances. Trade allowances offer retailers monetary incentives to buy products in bulk (Clow & Baack, 2014). Allowances will allow the targeted auto shops, supply retailers, and convenience stores the opportunity to offer deals and discounts to customers. Hot Fire can highly benefit from these allowances as long as certain restrictions are applied. First, Walsh has the ability to set off-invoice allowances where retailers receive rebates according to the quantity of fuel injector cleaner sold within a certain time period. For example, if a retailer is able to sell a case of 24 cans of Hot Fire within the first three months at the maximum price of $25, they will receive a 7% allowance back on their purchase. If the retailer is able to sell an additional 12 cans in the subsequent three months, the allowance will go up 2%.
This allowance trend will continue to rise until the retailer reaches a 15% reimbursement, where the percentage will then be capped. After six months of selling at least 60 cans, the retailers will be able to sell Hot Fire for an increased maximum price of $30. This strategy will allow retailers to create their own sales promotions, and will deter others from forward buying products at a reduced rate in order to build a surplus. To further motivate purchases, Hot Fire can provide a selection of trade incentives for the retailers who continue to buy their product after the allowance is capped.
Trade Incentives. At this stage, Hot Fire can attain more buy-in from retailers by providing trade incentives that complement the offered trade allowances. According to Feighery, Ribisl, Achabal, & Tyebjee (1999), trade incentives are retailer-based push strategies intended to encourage retailers to maximize sales by fashioning in-house merchandising environments. Cooperative merchandising agreements (CMAs), bonus packs, and cooperative advertising will assist Hot Fire in creating a well-rounded trade incentive strategy.
Cooperative Merchandising Agreements. In order to obtain long-term commitments, manufacturers aim to create CMAs, which include a mutual marketing effort from both parties under an annual contract (Clow & Baack, 2014). Hot Fire can offer monetary incentives to retailers who feature their fuel injector cleaner in ads, prominent displays, and scheduled, in-house deals. This cooperative strategy benefits both manufacturer and retail parties; while Hot Fire maintains a consistent revenue stream and is able to build brand awareness, retailers also benefit from being able to create calendar promotions where they can schedule and space out deals and sales (Clow & Baack, 2014).
Cooperative Advertising. In addition to cooperative merchandising agreements, cooperative advertising plans can be offered to major retailers that have an established, recognized brand with the capacity to reach large target markets. Sorenson (1970) argues, “[Cooperative advertising] tends to encourage local advertising by small retailers and brings in the national advertiser with sophisticated kinds of ads that the retailer might not be able to produce himself” (p. 13). If Hot Fire offers the local and regional racetracks reimbursements for ad costs, the company can build stronger brand awareness in a more professional setting.
Trade Magazine Advertisement. The advertisement pictured bellow is intended to build Hot Fire’s image, drive consumer and buyer interest, and reach business decision makers that subscribe to trade magazines. According to Cron and DeCarlo (2014), trade magazines grant manufacturers a tremendous opportunity to reach the decision makers of buying centers who typically prove difficult to reach. The tagline ‘Service Your Best Parts’ utilizes a subtle sexual innuendo as an advertising appeal to break through clutter and draw in the auto industry retailers. The Hot Fire website address is also present at the bottom of the ad to allow retailers easy access to information and making online purchases. www.HotFireWorks.com www.hotfireworks.com

Promoting to Consumers. If Hot Fire were to promote their fuel injector cleaner straight to consumers, the company would need to adjust its strategy to reflect the needs, trends, and values of different target markets. Cron and DeCarlo (2014) argue that price-based offers are instrumental in driving sales and appealing to new customers. Coupons, price-reducing promotions, and bonus packs are valuable tools to successfully promote to these target consumers.
Conclusions
In summation, by utilizing the trade promotions program outlined above, Hot Fire will dramatically improve the brands chances of driving consumer demand, increasing sales, and building a reputable corporate image. It is imperative to recognize the importance of strategically planned, cohesive trade incentives and advertising programs, which target either the retail or consumer market based on who the company is trying to reach. If price and allowance regulations and contracts are set appropriately, Hot Fire will be able to ensure national prominence, fair pricing to consumers, and long-term retailer relationships.

References
Clow, K. E., & Baack, D. (2014). Integrated advertising, promotion, and marketing communications (6th ed.). Upper Saddle River, NJ: Pearson. ISBN-13: 9780133126242
Evans, A., Wherry, J. (2011). Four steps to optimizing trade promotion effectiveness. Executive Insights, 13 (5). Retrieved from http://www.lek.com/sites/default/files/l.e.k._4_steps_to_optimizing_trade_promotion_effectiveness.pdf
Feighery, E. C., Ribisl, K.M., Achabal, D. D., & Tyebjee, T. T. (1999). Retail trade incentives: How tabacco industry practices compare with those of other industries. American Journal of Public Health, 89, 1564-1566. doi: 10.2105/AJPH.89.10.1564
Sorenson, D. D. (1970). Three Views of Cooperative Advertising. Journal Of Advertising Research, 10(6), 13-19.