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"Brand Building" Through Corporate Barter

Today, many new products are becoming obsolete even before they reach the consumer. And no one cares to wait around in the hopes that time will cure such marketing failures.

But as American business moves forward, what is probably the oldest form of commerce in the world—barter—has become a widely accepted solution to vexing financial and marketing challenges.

Nowhere is that clearer than in the "brand building" arena, where smart marketing people know they have to make every dollar count and maximize the marketplace exposure of their lucrative core brands.

Barter, more specifically corporate barter, can be an important weapon in the marketing executive's arsenal.

Almost everyone knows what barter is in its simplest terms: the exchange of products or services for other products or services. However, corporate barter is somewhat different. It's a process by which a manufacturer or provider of services can take unwanted products or underutilized capacity and turn it into valuable trade credits, by selling to a corporate barter company.

Corporate barter offers a great value to attractive alternative to the "pennies on the dollar" that liquidators offer for their unwanted goods. (A list of barter companies worldwide is found on the web site, under "Barter Contacts.")

What does the company do with the trade credits? It uses them to acquire things normally purchased with cash. In most cases these trade credits are equal to the regular wholesale price of goods, helping conserve cash.

Virtually every corporation has products or services that seemed like great idea when they were conceived, but failed to pay out quickly in the real-world marketplace. And the trouble is that most companies can't afford the cost of owning products of offering services that "aren't quite right,
right now."

That's a luxury that is growing increasingly scarce—and expensive—as marketers seek to expand the reach and sales of their most important items. Corporate barter is a solution for clearing out what's not working, while allowing a company's top-notch marketing and sales people to concentrate on what is working.

Instead of reverting to discounting and incentives on lines with good profit margins, and diverting time and attention from the core business, corporate barter can stanching the hemorrhaging and cleaning out the non-profitable products before they put a further drain on a company's cash flow.

Corporate barter can, in addition to cleaning out non-profitable products that can put a drain on your company's cash flow, also help expand your marketing efforts.

Normally, one's ad budget has to focus on primary core consumers, but stretching to reach potential consumers is where corporate barter can be effective by serving as the basis for creating promotions that boost the brand beyond traditional advertising media.

It's accomplished by setting up a marketing insurance program between a manufacturer and a corporate barter company, with the objective of selling some product beyond what the company expects to sell.

With a proviso, that should conditions change and the additional product (sold to the corporate barter company) be needed, the manufacturer could buy it back at a favorable price. Such strategy is especially useful when launching new products or line extensions, because even million-dollar research studies can't guarantee consumer acceptance.

Another great way to foster brand identity, while maintaining the integrity of the core brand, is incentives. The company that gives incentives to its sales people is conferring value and gaining more brand exposure. And the corporation bartering the incentive merchandise gets valuable trade credits.

Corporations which don't do much advertising can benefit from a corporate barter vendor-trading program. It allows a company to utilize accrued trade credits to help pay trusted vendors for such things as packaging, raw materials and printing.

Extending exposure to geographic areas and market segments not currently penetrated, such as overseas distribution, is attainable through corporate barter without incurring the cost of additional staff and marketing support.

And, more and more, excess production capacity can be utilized to make private label products. Thus more income is derived to support the core brands, without causing image erosion.

Overall, corporate barter offers bottomline value while helping maintain brand image and worth—vital assets in the marketplace.

(This article was condensed from BarterNews Issue #54.)

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