Key Issues

in Retail Issues, Tobacco Industry

The Nexus Between Tobacco Manufacturers and Tobacco Retailers

The point-of-purchase is critical to tobacco sales. It is where the four Ps of a marketing plan—product, price, promotion, and place—unite and where, if successful, a shopper is converted into a buyer. Beginning in the early 1990s, as they faced growing restrictions on advertising and promotion, tobacco companies increasingly focused their attention and marketing dollars on point-of-sale promotion.  The position, size, and type of tobacco display, and the location and number of company signs were specified in contractual agreements between tobacco companies and retailers. In exchange for complying with the tobacco companies’ requirements regarding display space and store signage, retailers were paid promotional allowances in the form of cash, discounts, rebates, merchandise, fixtures, prizes, or some combination of these.


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