A promotion on a branded product is rarely the retailer's decision alone. The cost is usually shared, and the sharing arrangement drives what appears on promotion.

Trade funds are negotiated ahead of the season

Manufacturers set aside a budget to support sales through retailers, and that budget is allocated during periodic negotiations covering price, volume and promotional support.

The agreement specifies how many promotional periods a product will receive, at what depth, and what the manufacturer contributes toward each.

Because these commitments are made in advance, much of a year's promotional calendar is fixed before the season it applies to begins.

The split determines the depth

A discount funded largely by the manufacturer costs the retailer little, which allows a deeper reduction than the retailer would fund alone.

Where funding is thin, the retailer must absorb more of the cut, and the promotion is either shallower or does not run.

This is the main reason two similar products in the same aisle receive very different promotional treatment despite comparable demand.

The split is rarely a fixed proportion. It is negotiated per event, and a manufacturer defending its position against a rival will contribute more than one selling into steady demand.

Funding buys position as well as price

Payments frequently cover placement rather than the discount itself, including end-of-aisle positions, catalogue space and inclusion in seasonal events.

These placements affect sales substantially and are limited in number, which makes them the scarce resource that the negotiation is really about.

The result is that promotional prominence reflects supplier investment as much as it reflects what is selling well.

Compliance is checked afterwards

Agreements specify what the retailer must deliver in exchange for funding, and performance against those terms is audited after the period.

Failure to execute a promotion as agreed can reduce or reverse the payment, which gives the retailer a strong incentive to run the activity as planned.

Conversely, funds claimed for activity that did not happen are a recurring source of dispute between manufacturers and retailers.

Why the mechanism favours large brands

Trade funding requires the ability to commit money in advance against uncertain returns, which is easier for a manufacturer with scale.

Smaller suppliers cannot match the funding, so their products appear on promotion less often regardless of how well they perform when they do.

This is one of the structural reasons that own-label and large-brand products dominate promotional space, and it operates independently of shopper preference.