What is the purpose of a trade discount?

A trade discount serves as a strategic incentive aimed primarily at retailers, encouraging them to promote and sell a manufacturer's products more actively. By providing this type of discount, manufacturers can motivate retailers to engage in marketing campaigns, allocate shelf space, and stock their products, thereby facilitating better distribution and increasing overall sales. Retailers benefit from the reduced purchase price, which can improve their profit margins and ultimately lead to a stronger relationship between the retailer and the manufacturer.

This option encapsulates the essence of trade discounts, which are typically not offered directly to the end consumer but are instead a means to foster business-to-business partnerships and promote product visibility in retail settings.