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Role of slotting fees and trade promotions in shaping how tobacco is marketed in retail stores
  1. Paul N Bloom
  1. Kenan-Flagler Business School, University of North Carolina, Chapel Hill, North Carolina, USA
  1. Professor Paul N Bloom, Kenan-Flagler Business School, University of North Carolina, Chapel Hill, NC 27599-3490, USApaul_bloom{at}unc.edu

Abstract

OBJECTIVE To examine how the retail environment in which tobacco is sold has changed because of the slotting fees and trade promotions paid by the tobacco companies. Public policy options for dealing with this environment are also evaluated.

DATA SOURCES A literature review, telephone interviews, and observation.

RESULTS The tobacco companies have been dramatically increasing the volume of slotting fees and trade promotions they pay to retailers, creating a more tobacco friendly retail environment containing self service displays and ample point-of-sale advertising. Critics express concern that these payments have kept prices lower and more varied than they might be otherwise, created more opportunities for pilferage and underage selling, and provided more youth exposure to tobacco promotions. Public policy makers could either ban these payments, institute policies designed to mitigate their harmful effects, or leave the situation as it is, relying on enforcement of existing statutes as well as market forces to reduce harm. Actions that might mitigate harmful effects would include putting minimum retail prices on tobacco products, banning self service displays, requiring retailers to be licensed, and adding more warning signs at the point of sale.

CONCLUSION Additional research is needed before determining the most appropriate public policy stance.

  • promotion
  • slotting
  • retailing
  • merchandising
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