Knowing Who Uses Co-Op Funds

Each week, you probably receive one or more multi-page, color brochures from your local supermarkets. These brochures are filled with this week’s bombastic specials on everything from soft drinks to bathroom tissue, dog food to deodorant — and they usually contain coupons you can use when you shop at their stores. These newsprint brochures are almost entirely paid for with co-op funds provided to your local grocer by the companies that produce the dozens of items listed inside. Each of the manufacturers, suppliers, or distributors pays for the percentage of advertising space it receives in each brochure.
For instance, if the toilet paper company is getting one full page of a 20-page flyer, it tosses 5 percent of the total cost of the brochure into the pot. By advertising only those products that provide co-op funds, your grocer can, in theory, produce and distribute these weekly brochures without spending a dime of his own money.
Virtually any small business you can think of sells products for which co-op ad funds are available. If you’re a store owner, look around your store, and you may be able to identify products from big-name manufacturers who, in all likelihood, have co-op or vendor dollars set aside to aid you in selling these items.
Many small businesses either don’t know co-op money is available, or they find the thought of collecting the funds too daunting. For this reason, a lot of available cash is left on the table because small businesses often think they have better things to do than fill out forms and adhere to certain rules in order to collect a few extra bucks to throw at advertising. You can work this situation to your favor, however, by taking advantage of the money your competitors aren’t seizing for themselves. Yes, it’s work. But when you receive a nice check from one of your manufacturers, or some free goods, or a big discount off your next purchase, the extra work is well worth your time and trouble.
Supply and demand are very important things to remember when you’re considering co-op funds. Here’s an example for you to mull over: The manufacturers and distributors that supply the grocer provide a certain amount of co-op money based on the total amount of their products the grocer purchases. If the grocer buys 1,000 cases of creamed corn for a special price and then advertises “dramatic savings” on that merchandise in his weekly mailer, he may get $1,000 in extra co-op funds as part of his deal with the creamed corn supplier. And you can bet that the grocer won’t buy 1,000 cases of any particular brand of creamed corn unless he also gets a boost of co-op money from the supplier to help him peddle it.
When you add up all the items advertised in these flyers, you can be sure that someone in the grocer’s advertising department spent a heck of a lot of time finding and figuring out what money was available from which suppliers, and how to collect and spend it. A local chain of supermarkets for which I have done advertising work has a full-time employee who does nothing but handle co-op funds.
The grocery business is just one example of who takes advantage of co-op funds and what they must do to collect them. Many other businesses offer co-op funds. For example, when you walk into a bookstore and see certain books displayed prominently at the front of the store or on end-caps (the face-out display of books at the end of an aisle), you probably know those store owners or managers didn’t feature those particular books simply because they enjoyed reading them. Instead, the publishers of the books on display cooperated with the store owners by spending money to advertise those books. And those promotions typically tie in to some theme or holiday, such as books by African-American authors during Black History Month (February), coffee-table books at the December holidays, or golf and other stereotypically “manly” pastimes around Father’s Day.
And, of course, it’s not just bookstores that do this: Hardware and homeimprovement stores partner with the manufacturers of the tools and raw materials they sell, and even service businesses may be able to find companies that offer co-op funds available to them, if the service includes products available from other vendors. In other words, co-op opportunities are as diverse as the companies that offer it. But you can always find a catch — there’s no such thing as a free lunch (free creamed corn, perhaps, but no free lunch). The retailer or small business (that’s you) must adhere to certain rules and make certain purchases in order to qualify for and collect co-op money.
But don’t be dismayed — it’s worth it! (For more on these qualifiers, check out the section “Understanding the Rules, Regulations, and Restrictions.”) Another form of cooperative funding is called vendor money. Vendor money is in addition to any of the manufacturer’s co-op funds you may be entitled to. It’s usually passed along to the squeakiest wheel — the clever retailer who knows it exists and has the cheek to go after it. Vendor money has no strings attached; you receive it either in the form of cash or as a discount on future purchases.