Definitions and terminology-related tobacco company contracts with retailers
| Term | Description |
| Buydown | Promotional or time-limited product price reductions (eg, $1.00 off a pack of Marlboro cigarettes). With a buydown, the retailer lowers the price of the product by a set amount negotiated with the manufacturer and tracks the number of discounts given, the manufacturer then reimburses the retailer at the end of a set period. Stores without a contract or agreement with manufacturers are unable to provide discounted tobacco products to their consumers. |
| Contract | Agreement between tobacco manufacturers and retailers that entails requirements and incentives from manufacturers to retailers (eg, Philip Morris Retail Leaders Program, RJ Reynolds Retail Partners Marketing Plan Contract (RPMPC), Brown & Williamson’s Kool Inner City Point-of-Purchase [POP] Program). |
| Incentive | Rewards (eg, free items, monetary gifts, tickets for events or trips) given to retailers for participating in contracts with tobacco manufacturers and abiding by the requirements stipulated. |
| Placement* | The location where a product is positioned for the consumer. |
| Price* | The amount that a consumer pays for a product. |
| Product* | The specific item or good produced by a manufacturer and obtained by a consumer. |
| Promotion* | The advertising efforts used to highlight a product. |
| Requirement | Standards (eg, 30% of shelf space) or actions expected by tobacco manufacturers of retailers who participate in contracts to receive incentives. |
| Slotting fee (slotting payment, listing fee) | Payments by tobacco manufacturers to retailers in exchange for guaranteed shelf space for new or existing products. |
| Trade promotions | Marketing focused on wholesalers and retailers, instead of focused directly on the consumer through mass media channels. |
*Placement, price, product, and promotion form the four ‘P’s’ of marketing.