Vendor Incentive

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Definition: Vendor Incentive

Vendor incentive are the incentives offered to the vendor to strengthen the relationship between the firm and sales associates, vendors and suppliers. Vendor incentives are widely seen to be targeted towards sales associates. This tactic is used by many firms to gain a larger part of the market share pie, to increase its top line (revenue).

These incentives take the form of free or deep discounted merchandise purchase, monetary rewards for sales of a particular brand. Vendor incentive is seen as a way of motivating the sales staff.

In recent studies, it has been seen that although vendor incentives has short term gains, in the long term it can be detrimental to the firms. Bargaining power of the sales staff increases due to increased practice of incentivising the vendors.


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