<P> Trade discounts , also called functional discounts , are payments to distribution channel members for performing some function . Examples of these functions are warehousing and shelf stocking . Trade discounts are often combined to include a series of functions , for example 20 / 12 / 5 could indicate a 20 % discount for warehousing the product , an additional 12 % discount for shipping the product , and an additional 5 % discount for keeping the shelves stocked . Trade discounts are most frequent in industries where retailers hold the majority of the power in the distribution channel ( referred to as channel captains ) . </P>
trade or functional discounts are offered by manufacturers to
distribution channel members for performing some function