Variable Rebates in Trade Promotions

In trade promotion management (TPM), there are two types of rebates:

Fixed rebates, in particular for funds
Fixed means that you decide on the exact amount to be paid to the account when the rebate is made.
Variable rebates that you pay out to the account normally at the end of a trade promotion
Variable means that the rebate amount depends on the quantity, weight, volume, or sales volume.

You can plan and execute trade promotions whose rebates vary over the duration of the trade promotion. The advantage of this is that you do not need to stop the trade promotion and create a new one with the new rebates.

Note Note

You can also plan and execute trade promotions whose off-invoice caps vary over the duration of the trade promotion. For more information, see Defining Off-Invoice Caps.

End of the note.

In the section below are examples of when you may want to use variable rebates in trade promotions.

Note Note

In business terms, variable rebates are also known as billbacks, everyday low prices (EDLP), and scan rates.

End of the note.

Activities

Call up the trade promotion for which you want to create variable rebates.
In the Planning assignment block in the trade promotion overview page, select or enter the following:
1. The appropriate spend type (variable or fixed) for variable rebates.
2. The relevant spend category for the variable rebate such as a billback rate or a scan rate.
3. The spend method, which could be deferred payment, for example.
4. The appropriate discount method, which could be by sales unit or by percentage, for example.
5. A value for the rebate in the column for spend values.

For more information, see the Customizing documentation for Customer Relationship Management under Start of the navigation path Trade Promotion Management Next navigation step Trade Promotions Define Trade Spends for Values End of the navigation path .

Example

Example 1

For a long-term trade promotion that lasts one year, you first set a target, for example, an EDLP of 2% less than the normal price. This target is based on the product's previous year's sales volume. During the year, you may need to adjust the rebate as the product changes to a different product category. It is now eligible for an EDLP of 3%.

Example 2

You may need to increase the rebate for a certain period of time to match or beat the competition. There might be an important trade promotion being run by a competitor.

Example 3

There is a new product for which you want to give an extra push during the year. Instead of stopping your trade promotion and creating a new one, you just add a rebate with a different value for this product.