What’s Happening?

1. What’s Happening? • http://www.youtube.com/watch?v=zkd5dJIVjgM&feature=player_embedded

2. Consumer and Trade Promotions Chapter 12

3. Consumer Promotions Defined • An incentive or an enticement that encourages a consumer to either select or purchase a product.

4. Types of Consumer Promotions • Coupons • Premiums • Contests and sweepstakes • Refunds and rebates • Sampling • Bonus packs • Price-offs

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. Consumers and Sales Promotions Targeted consumers are classified three ways: • Promotion prone consumers • Brand loyal consumers • Price sensitive consumers Take a look at question 8, on page 350. discuss with classmates seated close to you.

7. F I G U R E 1 2.6 Types of Sampling • In-store distribution • Direct sampling • Response sampling • Cross-ruff sampling • Media sampling • Professional sampling • Selective sampling

8. 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

9. 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).

10. Types of Coupons • Instant redemption • Scanner-delivered • Cross-ruffing/Co-branding • Response offer • E-coupons • Bounce-back/return coupon

11. F I G U R E 1 2 . 3 Methods of Distributing Coupons • Print media (90%) • FSI (88%) • Direct mail • On- or in-package • In-store • Sampling • Scanner-delivered • Cross-ruffing • Response offer • Internet • Fax • Sales staff

12. Do Coupons have an Impact? In 2007 in the United States: • 323 billion distributed • 3 billion redeemed (0.93%) • Average value was 89 cents • Savings of $3.47 billion • Coupon usage • 78% of households use • 64% willing to switch brands

13. 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

14. A coupon accompanies this informational Gold Bond advertisement

15. Premiums • Prizes or gifts that consumers receive for purchasing products and services

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

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

18. F I G U R E 1 2.5 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.

19. 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.

20. 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.

21. F I G U R E 12.7 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.

22. 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.

23. 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

24. Trade Promotions For Manufacturers • Account for 70% of marketing budget • Often 2nd largest expense • Account for 17.4% of gross sales Trade Allowances Trade Promotions Trade Shows Trade Incentives Trade Contests

25. Concerns about Trade Promotions • Corporate reward structure due to sales quotas • Used for short-term sales goals • Tend to be used outside of IMC Plans in many cases • Costs • Over-reliance to push merchandise • Difficult to reduce – competitive pressures • Potential erosion of brand image