COOPERATIVE FUNDING

Objective

The basic objective is to get the appointed distributor(s) to promote (sell) your products and services or even the brand.  (the article is written based on manufacturer-distributor relationship, which can be applied to distributor-reseller/dealer relationship)

Methodology

  1. Set an amount
  2. Set the time frame
  3. Set the usage guideline
  4. Set the claim procedure

A) Setting the Amount

  1. A percentage based on purchases of products, usually 2% - please see benchmark section for updates on percentage recommended.  It depends on the industry and profit margin of your product.
  2. A lump sum based on the activity eg launch of a new product, promotion activities etc.  This is usally done to promote a certain product or clear back logs.
  3. A reasonable sum to promote your product within the country. Usually for new players in the market.  The sales will not be immediate and therefore the co-op fund will be too small to create any significant impact for the manufacturer.
  4. The amount to be shared eg 50% from distributors or up to 100% full sponsorship by manufacturer.

B) Setting the Time Frame

  1. Within the financial year as sales target is negotiated per annum or if done quarterly, can specified the funds to be used within the next quarter.
  2. Within 3 to 6 months from the sales invoice.
  3. It is recommended to allow your partners to be able to use the funds within the financial year as this will facilitate their efficient use of the funds.  For example, if you set as per quarter use and if an event that may be espeically important to your product is 2 quarters away and one quarter funds may not be sufficient to run the program will hamper sales.  In addition, advertising is usually negotiated per annum in order to enjoy better rates and positioning.

C) Setting the Guidelines

  1. Prior approval is needed. In order to ensure that the activity chosen will be reimbursed, your partners have to obtain approval before the activity takes place. Once it is decided on an advertising or promotion activity, first check if it is listed as a covered activity (in appendix A etc). If it is not listed, contact the co-op administrator to check if can be accommodated. Also check the Approval Matrix.
  2. Documentation. Complete Form 1 and any additional forms, or other information as required. If the activity spans beyond the time frame set, will need to submit another form.
  3. Fax or email the data to your co-op administrator.
  4. Approval should be given within 3 days from the time the request is received.
  5. For urgent cases, a contact point should be given where immediately approval can be obtain.
  6. Meeting minimum requirements.
  • The Company name and logo must be displayed prominently and correctly. Refer to the Corporate Identity Manual for information about colour code, proper usage. Product illustrations, ad materials or photos must be supplied and/or approved by you.
  • In layouts where more than one manufacturer or brand is featured, the following conditions must be met: - each advertised manufacturer must be positioned distinctly and separately.
  • Regional or international distributors can supply their own exchange rate information by submitting a copy of a publication in which the rate appears (date must be included) and highlighting the exchange rate being used.

    Activities that should/may not be covered :

  • Advertisements which include competitors’ products
  • Customer personnel costs at trade shows or other events
  • Customer travel expenses
  • Evaluation units
  • Cash or cash-equivalent giveaways
  • Customer administrative fees

D) Claim Procedure

  1. Submission of approval form, invoice and proof of the activity.  Proof of the activity may include a copy of the advertisement, invoice from publications or ad agency or supplier, or photos of the activity (like seminar/exhibition).
  2. Payment will be made within 7/15/30 days of submission if all paperwork is complete.
  3. No actual payment may be made as the credit given can be use to purchase more products or future products.

 

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