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Consumer Sales Promotion: Sampling and Couponing

Consumer Sales Promotion: Sampling and Couponing. Chapter Objectives. After reading this chapter you should be able to: Appreciate the objectives and classification of consumer-oriented sales promotions. Recognize that many forms of promotions perform different objectives for marketers.

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Consumer Sales Promotion: Sampling and Couponing

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  1. Consumer Sales Promotion: Sampling and Couponing

  2. Chapter Objectives After reading this chapter you should be able to: • Appreciate the objectives and classification of consumer-oriented sales promotions. • Recognize that many forms of promotions perform different objectives for marketers. • Know the role of sampling, the forms of sampling, and the trends in sampling practice. • Be aware of the role of couponing, the types of coupons, and the developments in couponing practice. • Understand the coupon redemption process and misredemption. • Appreciate the role of promotion agencies.

  3. Groupon: A New Model for Couponing What challenges does Groupon face?

  4. Brand Management Objectives and Consumer Rewards • Brand Management Objectives (influencing consumer behavior): • Generate purchase trial and retrial (new customers) • Encourage repeat purchases (current customers) • Reinforce brand images • Consumer Rewards (encouraging behavior) • Can be classified as an immediate or delayed reward • Consumer rewards also can be both utilitarian and hedonic • Utilitarian • Monetary savings • Reduced search and decision costs • Improved product quality • Hedonic • Sense of being a wise shopper • Achieve a need for stimulation and variety • Obtain entertainment value • Being viewed as “tech-savvy” • Socializing with others on a deal

  5. Classification of Major Consumer-Oriented Promotions

  6. Sampling Defined Sampling The premier sales-promotion device for generating trial usage by delivering anactual- or trial-sized product to consumers

  7. Sampling Distribution Methods • For example: Direct mail • Mailed directly to households • Targeted by demographic characteristics or geo-demographics

  8. Online Sampling

  9. Figure 19.1: Sampling Charmin via a Fleet of Tractor Trailers

  10. Calculating the ROI for a Sampling Investment

  11. Examples of Targeted Sampling • A company that specializes in targeted sample distribution developed a program that connected with teenage males by distributing gift packages of product samples (such as shaving cream, razors, mouthwash, and candy) at tuxedo rental shops • Warner-Lambert came up with the clever idea of sampling Benadryl anti-itch cream at KOA Kampground locations where people are outdoors, and…itch

  12. When Should Sampling Be Used? • New or improved brand is demonstrably superior/has distinct relative advantages • Product concept is so innovative that it is difficult to communicate by advertising alone • Promotional budgets can afford to generate consumer trial quickly

  13. Sampling Problems • Expensive • Mishandling in distribution • Distributed to the wrong market • In- or on-package samples do not capture current non-consumers • Can fail to reach sufficient numbers of consumers to justify its expense • May be misused by customers • Pilferage

  14. Couponing Defined Coupon A promotional device that rewards consumers for purchasing the coupon-offering brand by providing cents-off or dollars-off savings.

  15. Figure 19.2: Illustration of Coupon Offers

  16. Coupon Distribution Methods • Freestanding Inserts (FSIs) (89.4% of all coupons) • In stores (shelf delivered, instant, handout, scanner delivered) • Direct Mail • Magazines • Newspapers • In- and On-Package • Online

  17. Full Coupon Cost

  18. Coupon Redemption Rates by Distribution Method

  19. Point of Purchase Couponing • Instant Redeemable Coupons • Peelable from the package at the point of purchase • Represent an immediate reward • An alternative to price-off deals • Redemption rate 19.5%

  20. Point of Purchase Couponing • Shelf-Delivered Coupons • Instant Coupon Machines, Smart SourceTM • Machines are attached to the shelf alongside coupon-sponsoring brands • Redemption rate about 9.1%

  21. Point of Purchase Couponing • Scanner-Delivered Coupons • Catalina Marketing Corp. offers two programs • Reward is delayed with the Checkout Coupon • Potentially very effective because they provide a way to carefully target coupon distribution • Redemption rate about 4%

  22. Point of Purchase Couponing • Mobile Phone Coupons • Using mobile phones to aid grocery shopping is of interest to 40% of consumers • Multiple grocers are developing technology, or finding partner firms, to allow shoppers to scan groceries and redeem targeted coupons • Redemption rate about 10.0%

  23. Mail- and Media-Delivered Coupons • Highest household penetration (95%) • *Highest redemption rate of all mass-delivered coupons (3.5%) • Increase the amount of product purchases • Relatively expensive • Inefficient and expensive for brands enjoying a high market share

  24. Mail- and Media-Delivered Coupons • 89.4% of all coupons distributed via Sunday newspaper freestanding inserts • Broad exposure • Relatively cheaper • Reminder function • Advertising function • Redemption rate is very low (1%) • Don’t generate much trade interest • Susceptible to misredemption • Declining readership

  25. In- and On-Pack Coupons • Included either inside a product's package or as a part of the package’s exterior • Affords consumers with a delayed reward that is designed more for encouraging repeat than trial purchases • A coupon for one brand is often promoted by another brand (cross-ruff) • Advantage: virtually no distribution costs • Redemption rates: 4.4 to 5.0% • Limitations: delayed reward, do not reach nonusers, do not leverage trade interest

  26. Online and Social Couponing • Are distributed by many online sites (e.g., www.coupons.com; www.groupon.com; http://www.livingsocial.com) • Allows consumers to print their own coupons, at no additional cost to the advertiser • Has potential for fraud in that criminals can alter their printed coupons • Can be distributed wirelessly

  27. Groupon • Social group coupons have exploded onto the scene in the last several years • Estimated redemption rates range from 78% - 82% once the coupon is purchased • In Q4 2011, revenues doubled to over $500 million • Yet, Groupon posted a $37 million loss in Q1 2012 • Criticisms: • Successful deals might swamp small businesses with too many customers • Deals merely attract one-time bargain hunters • An estimated seven out of eight deals suggested by merchants are rejected

  28. Figure 19.3: Coupon Redemption and Misredemption Process

  29. A Coupon Fraud Case: The “Bait” is a Fictitious Coupon (“Broach”)

  30. The Role of Promotion Agencies • Specialized Promotion Agencies • Work with brand managers to formulate promotion strategies and implement tactical programs. • The Rise of the Online Promotion Agency • A new generation of promotion agencies emphasize online promotions—coupons, sweepstakes offers, online promotional games, free sample offerings, and online continuity programs.

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