Alternatively, it can be a consequence of a poorly managed sales force attempting to meet short-term objectives and quotas in a way that is detrimental to a company in the long term.
Firstly, distributors will often return any unsold goods to the company, incurring a carrying cost and also developing a backlog of product inventory.
Discounts used to drive trade loading can greatly affect profits, and even help establish gray market channels, because salespeople no longer adequately qualify their prospects.
The supplier's sales force then panics, and sells a large amount of the product under more favorable terms than they would under ordinary circumstances.
In the United States, the U.S. Securities and Exchange Commission has in some cases litigated against such corporations,[2][3][4] and private class-action suits have been filed.