consumer and trade promotions
DESCRIPTION
Consumer and Trade Promotions. Chapter 12. Consumer Promotions Defined. An incentive or an enticement that encourages a consumer to either select or purchase a product. . Types of Consumer Promotions. Coupons Premiums Contests and sweepstakes Refunds and rebates Sampling Bonus packs - PowerPoint PPT PresentationTRANSCRIPT
CHAPTER 12
Consumer and Trade Promotions
Consumer Promotions Defined
An incentive or an enticement that encourages a consumer to either select or purchase a product.
Types of Consumer Promotions
CouponsPremiumsContests and sweepstakesRefunds and rebatesSamplingBonus packsPrice-offs
Influencing Brand Purchases
Sampling 7.78Word-of-mouth 7.18Coupons 5.91Advertising 5.61Contests 1.24
On a scale of 1 to 10, the following are the top five influences on the brand purchased by a consumer.
Source: The Second Annual Survey of Consumer Preferences for Product Sampling, Santella & Associates (Http://www.santella.com/marketing.htm).
Consumers and Sales Promotions
Targeted consumers are classified four ways:
Promotion prone consumersBrand loyal consumersPrice sensitive consumersBrand preference
In-store distributionDirect samplingResponse samplingCross-ruff samplingMedia samplingProfessional samplingSelective sampling
F I G U R E 1 2.6Types of Sampling
Sampling
How effective would sampling be for the goods and services listed on the right?
How would you design a sampling program that would be effective, yet not too costly?
Fitness center Ice cream Dental service Clothing manufacturer Auto repair service Office supply store
Discussion Question
Page 334, Question 7
Sampling
Most effective when used to introduce a new product or a new version of a product.
Primary purpose is to encourage trial use by a customer.
Sampling is a very effective IMC tool when used correctly.
The two key drawbacks to sampling programs are: Cost Customers discarding the sample without trying it
(waste).
Types of Coupons
Instant redemptionScanner-deliveredCross-ruffing/Co-
brandingResponse offerE-couponsBounce-back/return
coupon
Example of a Response Offer
Print media (90%) FSI (88%)
Direct mail On- or in-package In-store Sampling Scanner-delivered Cross-ruffing Response offer Internet Fax Sales staff
F I G U R E 1 2 . 3Methods of Distributing Coupons
What’s Happening?
http://www.youtube.com/watch?v=WUFSHzT2xuY
http://www.youtube.com/watch?v=7DR4jkMFfRg&feature=youtube_gdata_player
Do Coupons have an Impact?
In 2007 in the United States:323 billion distributed3 billion redeemed (0.93%)Average value was 89 centsSavings of $3.47 billionCoupon usage
78% of households use 64% willing to switch brands http://www.youtube.com/watch?v=9ITQ1aTcoAo
Coupon Redemption Rates
Instant redeemable 39.3% Bounce-back 17.2% Instant redeemable – cross ruff 17.1% Electronic shelf 10.2% Electronic checkout 7.8% In-pack 5.8% On-pack 4.7% Direct mail 3.5% Handout 3.1% Free-standing inserts 1.3%
Type of coupon Percent Redeemed
Source: Santella & Associates
A coupon accompanies this informational Gold Bond advertisement
Premiums
Prizes or gifts that consumers receive for purchasing products and services
Fast-food chains are well known for their in-store premiums.
Types of Premiums
Free-in-the-mailIn or on-packageStore or manufacturerSelf-liquidating
Match the premium to the target market.Carefully select the premiums (Avoid fads, try for
exclusivity).Pick a premium that reinforces the firm’s
product and image.Integrate the premium with other IMC tools
(Especially advertising and POP displays).Don’t use premiums to increase profits.
Source: Based on Don Jagoda, “The Seven Habits of Highly Successful Premiums,”Incentive, (August 1999), Vol. 173, Issue 8, pp. 104-105.
F I G U R E 1 2.5Keys to Successful Premiums
Creating Successful Contests and Sweepstakes
Know the legal restrictions.Must overcome clutter.Find the right combination of prizes.Must consider extrinsic and intrinsic value.Look for tie-in opportunities with special
events or other companies.Must be coordinated with POP Displays and
other marketing tools.One trend is to ignite a viral buzz around
the brand, through the use of social media
Successful Rebate/Refund Programs
Visibility.Encourages customers to act.Not be too complicated.Avoid becoming a permanent component
of the purchase decision (automobile rebates)
Profitable for retailers to handle.
Increase usage of the product
Match or pre-empt competitive actions.
Stockpiling of product.Develop customer loyalty.Attract new users.Encourage brand
switching.
F I G U R E 12.7Reasons for Using Bonus Packs
Price-Offs
Temporary reduction in price.
Excellent for boosting short-term sales.
Excellent for generating customer traffic.
Can be implemented easily. Must be careful not to
increase customer price sensitivity.
Can have detrimental impact on brand and corporate image.
Promotion Combinations
Overlay – two or more consumer promotions as part of a single campaign
Intra-company tie-in – a consumer promotion with another product within the company
Inter-company tie-in – a consumer promotion with another organization
Trade Promotions
• Account for 70% of marketing budget• Often 2nd largest expense• Account for 17.4% of gross sales
For Manufacturers
TradePromotions
Trade Allowances
Trade Incentives
Trade Contests
Trade Shows
Concerns about Trade Promotions
Corporate reward structure due to sales quotas
Used for short-term sales goalsTend to be used outside of IMC Plans in many
casesCostsOver-reliance to push merchandiseDifficult to reduce – competitive pressuresPotential erosion of brand image