BARTER
An Effective Marketing Tool for a New Product Launch
By definition, barter is "the trading of products or services for other products or services of equal value." This enables entities that manufacture products, own merchandise or generate services, to exchange their assets as payment for other goods or services as well as for media or travel. (Even for raw materials or components in the manufacturing process.)
Barter is an especially appropriate inclusion in a marketing plan when a company has the opportunity to use its product as "payment" for media coverage of that product, and PLI is a recognized leader in this area. A perfect example of this is a project on which PLI founder Peter Laitmon worked during his tenure as an executive at a barter company. At the time, Peugeot was looking to obtain distribution for a new moped to be introduced in the U.S. By using its mopeds to pay for the media, Peugeot was able to pay with "cost of goods" dollars, and the media company in turn used the mopeds as promotions for various radio and TV stations throughout the area where Peugeot wanted to present the moped. It was a win-win for both entities, and proved an effective promotion for the consumer as well.
Barter is also often an alternative to liquidation for a company that doesn't want older inventory clogging its existing channels of distribution. A reputable barter company can acquire the inventory for media or other services and remarket the merchandise in a restricted manner, so as not to interfere with current business.
On the other hand, while barter can be a solution to many problems and provide much in the way of opportunity, the subject of corporate barter often comes under fire because many Fortune 500 companies have had poor experiences with "value received" in exchange for product traded.
So before making a decision to consider barter as an option for reducing excess inventory, companies should understand how barter works and know how each of the participants in the process can enhance - or adversely affect - the end result.
Additionally, the company chosen to handle or broker the barter transaction should be reputable and be asked to provide guarantees that the client will receive equal value in media or product when needed. It is most important that the barter company be contractually responsible for how the client's product or service is remarketed, so as to provide incremental sales without disruption.
Click on the links below to learn how the role and relationship of the client, the barter company, the advertising agency, and the client service or new resource contribute to an effective transaction.
Participants in barter transactions most often include:
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