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Trade Funds
Definition
The budget that a manufacturer allocates to support retailer promotions, price reductions, merchandising programs, and other trade activities. Trade funds cover tactics such as off-invoice discounts, bill-backs, display fees, and scan-based allowances, and are a major component of CPG commercial spend.
How It's Calculated
Typically a percentage of gross sales (e.g., 12–20%), allocated across trade tactics.
Example
A personal care brand dedicates 18% of its annual revenue to trade funds, which retailers use for temporary price reductions and in-store feature programs.
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