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Understanding Price Calculation & Trade Schemes in FMCG

Time to absorb some basics on FMCG Pricing and Trade Schemes – something that prominently differentiates FMCG from other sectors and yet something that was unfortunately left out in our B-School Curriculum.
Before we get into the mathematics part of it, let us re-visit the flow of goods from one layer to the other in the FMCG framework - This will be explained in detail in the next blog post
From Company->Dealers/Distributors/Stockists->Whole-Salers/Retailers->Customer
Please readthispost before you read any further.
Now before exploring the above mentioned transitions, we need to clarify ‘Trade Schemes’. Trade Schemes are usually additional support in terms of Sales Promotion or Trade Promotion or Temporary Price Reduction extended to the trade considering quite a many factors like Competitor’s Activities, Seasonality, Company’s own agenda etc. etc. Trade Schemes are of 2 types: Primary Scheme & Secondary Scheme (Not to be confused with the Primary Sale & Secondary Sale m…