PROBLEM

1. Prestige Speakers, Ltd. manufactures expensive speakers that are sold through manufacturers' agents to selected retailers who specialize in selling and installing high quality audio components and home theatre systems. Most of Prestige's audio speakers are sold on credit. In fact, Prestige usually does not get paid until its retailers manage to sell the speakers themselves. While this service is convenient and necessary for most of its customers, it places a heavy financial burden on Prestige. Recently, for example, the company was forced to postpone production of a promising new product due to a lack of cash.

Additional Info:

Allowances are similar to discounts. They are either given to final consumers, or to customers or channel members for doing something or accepting less of something. Different types of allowances include:

a) Advertising allowances b) Push money or prize money allowances c) Tradein allowances d) Stocking allowances

QUESTION: Should Prestige consider using discounts or allowances to solve its financial problem? Why? If so, what type would be best? Why?