Chapter Overview

1. Chapter Overview 11 Consumer Promotions • Types of consumer promotions • Planning for consumer promotions • Business-to-business promotions • International consumer promotions

2. Discussion Slide Coupons 11 • How often do you use coupons? • What products do you tend to use coupons to purchase? • Will a coupon affect which brand you buy? • Why do you think companies offer so many coupons to consumers?

3. F I G U R E 1 1 . 1 Types of Consumer Promotions • Coupons • Premiums • Contests and sweepstakes • Refunds and rebates • Sampling • Bonus packs • Price-offs

4. A coupon accompanies this informational Gold Bond advertisement

5. Influencing Brand Purchases On a scale of 1 to 10, the following are the top five influences on the brand purchased by a consumer. • Sampling 7.78 • Word-of-mouth 7.18 • Coupons 5.91 • Advertising 5.61 • Contests 1.24 Source: The Second Annual Survey of Consumer Preferences for Product Sampling, Santella & Associates (Http://www.santella.com/marketing.htm).

6. Percentage of Sales with a Coupon Product category % of sales using manufacturer’s coupon • Disposable diapers 17.1% • Detergents 15.0% • Meal starters 14.2% • Dough products (refrigerated) 13.6% • Cereal 13.4% • Wrapping materials, bags 12.8% • Oral hygiene products 11.7% • Household cleaners 11.7% Source: AC Nielson Scantrack, Santella & Associates

7. F I G U R E 1 1 . 2 Methods of Distributing Coupons • Print media (88%) • FSI (80%) • Direct mail (4%) • On, in or near package (3%) • Cross-ruff • Other methods (5%) • In-store • Sampling • Scanner-delivered • Response offer • Internet • Fax • Sales staff

8. Types of Coupons • Instant redemption • Scanner-delivered • Cross-ruffing • Response offer • U-pons

9. 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 Avg. Redemption Rate Source: Santella & Associates

10. Problems with Coupons • Reduced revenues • Mass cutting • Counterfeiting • Misredemption • Dependency

11. Factors Affecting Coupon Effectiveness • Face value of coupon. • Distribution method. • Coupon for preferred brand or brand in evoked set.

12. STOP INTEGRATED LEARNING EXPERIENCE • Coupons.com, Inc. • Http://www.coupons.com/Advertising.asp • Coupon Country/Kaufman Advertising • Http://www.couponcountry.com Coupon Distribution and Marketing Services

13. Types of Premiums • Free-in-the-mail • In- or on-package • Store or manufacturer • Self-liquidating

14. Fisher Boy Free, in-the-mail premium

15. Fast-food chains are well known for their in-store premiums.

16. F I G U R E 1 1 . 3 Keys to Successful Premiums • 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.

17. Creating Successful Contests and Sweepstakes • Know the legal restrictions. • Do we want losers? • Must overcome clutter. • Find the right combination of prizes. • Look for tie-in opportunities with special events or other companies. • Must be coordinated with POP Displays and other marketing tools.

18. STOP INTEGRATED LEARNING EXPERIENCE • Sweepstakes Builder • Http://www.sweepstakesbuilder.com • Promotions Activators, Inc. • Http://www.promotionactivators.com • ADPAC Corporation • Http://www.adpaccorp.com • How can these firms assist in the development of a contest or sweepstake? • What other promotional services can they provide? • What are the advantages and disadvantages of using one firm for multiple or all of the consumer promotions?

19. Successful Rebate/Refund Programs • Visibility is necessary • Encourages customers to act • Should not be too complicated • Avoid becoming a permanent component of the purchase decision (automobile rebates) • Should be easy and profitable for retailers

20. F I G U R E 1 1 . 4 Types of Sampling • In-store distribution • Direct sampling • Response sampling • Cross-ruff sampling • Media sampling • Professional sampling • Selective sampling

21. ExperimentImpact of In-Store Sampling • Meat product A 100% 430% 110% • Meat product B 100% 590% 123% • Meat product C 100% 185% 100% • Bread product 100% 170% 90% • Biscuit product A 100% 359% 64% • Biscuit product B 100% 201% 49% ProductPrevious 4 weeksSampling WeekFollowing 4weeks Source: Michelle Lawson, Dalton McGuinness and Don Esslemont, “The Effect of In-Store Sampling on the Sale of Food Products,” Marketing Bulletin, 1990, Vol. 1, pp 1-6.

22. ExperimentImpact of In-Store Sampling on Competitors • Bread product 100% 170% 90% • Competitor A 100% 106% 105% • Competitor B 100% 79% 93% • Competitor C 100% 78% 86% ProductPrevious 4 weekSampling weekFollowing 4 weeks Source: Michelle Lawson, Dalton McGuinness and Don Esslemont, “The Effect of In-Store Sampling on the Sale of Food Products,” Marketing Bulletin, 1990, Vol. 1, pp 1-6.

23. Discussion Slide 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? • What type of consumers would you target for the sampling? • Fitness center • Ice cream • Dental service • Clothing manufacturer • Auto repair service • Office supply store • B-to-B consulting service • B-to-B supplier of raw materials such as sugar, flour, etc. to bakeries.

24. F I G U R E 1 1 . 5 Reasons for Using Bonus Packs • Increase usage of the product • Match or pre-empt competitive actions • Stockpiling of product • Develop customer loyalty • Attract new users • Encourage brand switching

25. 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.

26. Impact of Price-off on Consumer Purchase Consumer purchased because of sale price 9% Consumer unaware item was on sale. 51% Consumer would have purchased item anyway 40% Source: “Studies Indicate Coupons are an Effective Promotional Tool,” Santella & Associates (http://www.santella.com/coupon.htm)

27. Promotion Combinations • Over-lay • Intra-company tie-in • Inter-company tie-in

28. Types of Consumers • Promotion prone consumers • Brand loyal consumers • Price sensitive consumers

29. STOP INTEGRATED LEARNING EXPERIENCE Consumer Promotions on the Internet • What type of sales promotions are offered? • What do you think are the objectives of the consumer promotions? • Are the promotions offered on the Web site consistent with their advertising and promotions offered at retail outlets? • Quaker State • Http://www.quakerstate.com • Taco Bell • Http://www.tacobell.com • Kraft Foods • Http://www.kraft.com • Jockey • Http://www.jockey.com • Avon • Http://www.avon.com • Lee Jeans • Http://www.leejeans.com

30. Business-to-Business Consumer Promotions • 18.7% of B-to-B marketing budgets spent on sales promotions. • Coupons • Premiums • Sweepstakes and contests • Sampling • Bonus packs

31. International Consumer Promotions • Difficult to centralize consumer promotion programs. • Laws vary across countries. • Difference in distribution rates • Requires an experienced international sales promotion coordinator.

32. Redemption Rates Distribution Methods

33. Building Your IMC Campaign • Choose the best promotions for your product and desired product image. • Ensure there is a synergy between the advertising plan, trade promotions and consumer promotions. • Select an agency to design and handle the consumer promotion program.