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Consumer Sales
Promotion: Premiums
and Other Promotions
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Chapter Objectives
After reading this chapter you should be able to:
1. Understand the role of premiums, the types of
premiums, and the developments in premium
practice.
2. Recognize the role of price-off promotions and
bonus packages.
3. Be aware of the role of rebates and refund offers.
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Chapter Objectives (cont’d)
4. Know the differences among sweepstakes, contests,
and games, and the reasons for using each form of
promotion.
5. Understand the role of continuity promotions.
6. Appreciate retailer-driven promotions.
7. Evaluate the potential effectiveness of sales
promotion ideas, and appraise the effectiveness of
completed promotional programs.
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Whopper Sacrifice: Is an Online Premium
Worth 10 Friends?
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Classification of Major Consumer-Oriented
Promotions
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Premiums Defined
Premiums
Articles of merchandise or service offered as a
form of gift by manufacturers to induce action
on the part of the sales force, trade
representatives, and/or consumers.
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Figure 20.1: Illustration of a Mail-in Premium
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Price-Offs
• Price-off promotions: a reduction in a brand’s regular price.
• A price-off is clearly labeled as such on a package.
• Effective when a marketer’s objective is to:
1.
Reward present brand users
2.
Get consumers to purchase larger quantities of a brand than they
normally would
3.
Establish a repeat-purchase pattern
4.
Ensure that promotional dollars reach consumers
5.
Obtain off-shelf display space
6.
Provide the sales force with an incentive to obtain retailer support
• Bonus packs: Extra quantities of a product that a company
makes available to consumers at the regular price.
• Sometimes used as an alternative to price-offs
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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FTC Price-Off Regulations
(as a result of the 1966 Fair Packaging and Labeling Act)
• Only used on brands with established retail prices
• Limit to three per year per brand size
• Must be hiatus period (at least 30 days) between
promotions
• No more than 50% of volume comes from promotion
• Manufacturer must provide display materials
• Dealer required to show regular and promotion price
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Games
• Games represent a growing form of promotion
that is being increasingly used in lieu of
sweepstakes and contests
• Provide an instant reward
• Encourage repeat purchasing from existing brand
users
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Avoiding Snafus
• PepsiCo game snafu in the Philippines would have made the
company liable for $18 billion
• Beatrice Company's Monday Night Football promotion was
foiled by a P&G salesman who broke their code and turned in
cards worth $21 million in prize money
• A security employee for the supplier of McDonald’s
Monopoly game pieces stole winning tickets and distributed
them to friends who obtained $13 million in prize money
• Moral: Promotional games can go awry and brand mangers
must go to extreme lengths to protect the integrity of their
games
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Refunds and Rebates
Refund
Cash reimbursement for purchasing consumer
packaged goods.
Rebate
Cash reimbursement for purchasing a durable good.
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Figure 20.2: Illustration of a Rebate Offer
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Phantom Discounts and Rebate Fraud
• Phantom Discounts
• Many consumers never bother to redeem rebates
• At the time of brand choice, consumers tend to
exaggerate the benefit to be obtained from a rebate
relative to the future effort required to redeem a
rebate-offer
• Rebate Fraud
• Can occur when rebate offers are promoted, but are
not fulfilled
• Consumers can commit fraud by submitting phony
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receipts
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Sweepstakes and Contests
• Primarily to enhance a brand’s image
• Sweepstakes are preferred because they are
relatively inexpensive and simple to execute
Sweepstakes: purely
on the basis of
chance, no need for
proofs of purchase
Contest: solve the
specific contest
problem and may
need proofs of
purchase
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Figure 20.3: Illustration of a Sweepstakes
Offer
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Figure 20.4: Illustration of Another
Sweepstakes Offer
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Figure 20.5: Illustration of Promotional
Contests
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Overlay and Tie-In Promotions
• Overlay Promotions: Combines two or more
promotion techniques together (e.g., premium offer
and a coupon in a FSI).
• Increases the likelihood that consumers will attend a
promotional message
• Tie-In Promotions: Simultaneous promotion of
multiple brands in a promotion (e.g., intra-company
tie-in or inter-company tie-in).
•
•
•
•
Intra-company (between different companies)
Inter-company (within the same company)
Tie-ins are cost-effective, but lead time is lengthened
The partners’ images should reinforce each other
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Figure 20.6: Illustration of an Overlay
Program
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Figure 20.7: Illustration of an Intercompany
Tie-In Promotion
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Overlay and Tie-In Implementation Problems
• Promotion lead time is lengthened
• Creative conflicts and convoluted messages may
result from each partner trying to receive primary
attention
• To reduce problems, it is important that:
1. The profiles of each partner’s customers be similar
2. The partners’ images reinforce each other
3. The partners be willing to cooperate
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Continuity Promotions
• Reward consumers’ repeat purchasing of a
particular brand
• Often referred to as reward, loyalty, or, point
programs
• Example: Frequent-flyer programs
• Encourage consumers to stick with a particular
airline or hotel to accumulate points to use toward
free flights and lodging
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Retailer Promotions
• To increase store traffic, offer shoppers
attractive price discounts or other deals, and
build customer loyalty:
•
•
•
•
Retail Coupons
Frequent-Shopper Programs
Special Price Deals
Samples, Premiums, and Games
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Example of a Store-Sponsored Game
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Evaluating Sales Promotion Ideas
• Step 1: Identify the Objectives
• Step 2: Achieve Agreement
• Step 3: Evaluation System
• Is the idea a good one?
• Will the promotions idea appeal to the target
market?
• Is the idea unique?
• Is the promotion presented clearly?
• Is the proposed idea cost-effective?
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Postmortem Analysis
• Judging five characteristics:
1. Expense
2. Efficiency
3. Execution Ease
4. Equity Enhancement
5. Effectiveness
• Weighting the individual factors:
• Program j’s Score =
5
𝑖=𝑗 (𝐸𝑖𝑗
× 𝑊𝑖 )
©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Evaluation of Three Completed Promotional
Programs
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