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Trade discount and cash discount are two important forms of discounts used by businesses as part of their marketing and sales strategies. Although both reduce the amount payable by a buyer, they are different in their purpose, timing, accounting treatment, and effect on customer behaviour. In marketing, discounts are not merely reductions in price; they are tools used to influence distribution, encourage purchases, improve cash flow, build customer relationships, and increase sales. Understanding the difference between trade discount and cash discount is therefore important for marketers as well as business managers. A trade discount is a reduction in the listed or catalogue price of goods offered by a seller to a buyer, usually because of the buyer's position in the distribution channel or the quantity purchased. It is generally offered to wholesalers, distributors, retailers, institutional buyers, or other business customers. The main purpose of a trade discount is to encourage bulk purchasing and support the distribution system. For example, a manufacturer may quote a catalogue price of ₹1,000 per unit to a retailer and allow a trade discount of 20 percent. The retailer will therefore purchase the product for ₹800 per unit. The trade discount is normally deducted from the listed price at the time of sale, and the invoice records the net selling price. From a marketing perspective, trade discounts play an _________ ___ ___ __________ ________.
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