QPS: Unlock Benefits with Quantity Purchase Schemes
The Quantity Purchase Scheme (QPS) is a strategic offer that benefits both retailers and wholesalers, helping them increase sales while receiving valuable perks in the form of discounts and free products. If you're a retailer looking to maximize the benefits of QPS, it's important to understand how these schemes work and what success factors you should focus on for effective execution.
What is a Quantity Purchase Scheme (QPS)?
A Quantity Purchase Scheme (QPS) is a promotional strategy designed by manufacturers or suppliers to incentivize bulk purchases from retailers and wholesalers. The basic idea is simple: the more you buy, the more you save or receive additional benefits. This often involves offering extra discounts, gifts, or other incentives based on the quantity of products purchased within a specific time frame.
In QPS, the retailer or wholesaler purchases a certain volume of goods, and depending on the quantity, they can get various rewards like a higher discount rate or complimentary products. The goal is to encourage higher sales and increase customer loyalty through these attractive offers.
How QPS Works: Example of the Scheme
Let’s break down how QPS typically functions. For instance, consider the following example of a quantity-based discount scheme:
- Purchase 6 cases: Get an additional 1.5% discount.
- Purchase 10 cases: Get an additional 2% discount.
- Purchase 15 cases: Get an additional 2.5% discount.
- Purchase 20 cases: Get an additional 3% discount.
These incremental benefits are designed to encourage retailers to place larger orders, thus ensuring better stock availability and boosting sales volume for the manufacturer.
Alternatively, some QPS schemes might involve gifts based on the purchase amount:
- ₹10,000 purchase: Get ₹1,000 worth of free products.
- ₹20,000 purchase: Receive a dinner set.
- ₹40,000 purchase: Get a microwave.
- ₹60,000 purchase: Receive a color TV.
- ₹80,000 purchase: Get a washing machine.
By targeting specific sales targets, manufacturers aim to motivate retailers to increase their order sizes. Retailers can leverage these offers to boost their sales while enjoying the additional incentives.
Key Success Factors for Effective Execution of QPS
- Clear and High-Value Payouts
The success of a Quantity Purchase Scheme depends largely on the payout structure. To avoid market disruptions such as undercutting, ensure that the discount rates and offers are compelling but not excessively high. Overly generous offers can lead to unfair competition, as wholesalers might reduce prices significantly to offload stock. It’s important to find a balance that benefits both the business and the retailer without creating problems in the market.
- Timely Delivery of Benefits
When retailers participate in a scheme, they expect quick benefits once they reach the required purchase volume. If the benefits (such as discounts or gifts) are delayed beyond the agreed time frame, retailers may get frustrated and this could affect future sales. For example, if a scheme is active for two or three months, the retailer should receive their benefits promptly after the scheme concludes.
- Effective Communication
One of the most critical aspects of a successful QPS is communication. The details of the scheme—such as how much to purchase, the timeline for receiving benefits, and the rewards—must be communicated clearly to the retailer. Misunderstandings or misinformation can create dissatisfaction and potentially lead to lost sales.
- Monitor and Track Progress
Retailers need to track their purchases and progress to ensure that they are eligible for the benefits. It’s crucial to have a transparent system where both parties (retailer and manufacturer) can monitor the purchases made and the benefits they are entitled to. This can be done through regular follow-ups, ensuring that everyone is on the same page and there are no surprises when it comes to redeeming rewards.
- Incentive Flexibility
While some QPS schemes offer discounts, others focus on providing valuable gifts. It's important to tailor the scheme to the preferences of your retail partners. For instance, some retailers may prefer a monetary discount, while others may find more value in receiving physical gifts. Offering a range of incentives can make your scheme more appealing to a broader group of retailers.
Why Should Retailers Embrace QPS?
For retailers, QPS offers a unique opportunity to increase their profit margins while securing better stock at a lower cost. By taking advantage of the volume-based discounts or free product incentives, retailers can improve their bottom line and gain a competitive edge. Additionally, QPS helps to strengthen relationships with manufacturers and wholesalers by fostering mutual growth and collaboration.
Final Thoughts
Quantity Purchase Schemes (QPS) are an excellent tool for both retailers and wholesalers to boost sales, improve profitability and drive business growth. However, successful execution of QPS relies heavily on clear communication, realistic offers, and a timely delivery of benefits. If done correctly, QPS can be a win-win situation for all parties involved, ensuring that retailers can offer competitive prices and stay loyal to manufacturers. By strategically implementing these schemes and focusing on the key success factors, retailers can maximize the potential of QPS to grow their businesses and improve their relationships with suppliers.
