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
 Price-offs
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
 Word-of-mouth
 Coupons
 Advertising
 Contests
7.78
7.18
5.91
5.61
1.24
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 consumers
 Brand loyal consumers
 Price sensitive consumers
 Brand preference
FIGURE
1 2.6
Types of Sampling
 In-store distribution
 Direct sampling
 Response sampling
 Cross-ruff sampling
 Media sampling
 Professional sampling
 Selective 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?
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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 redemption
 Scanner-delivered
 Cross-ruffing/Co-
branding
 Response offer
 E-coupons
 Bounce-back/return
coupon
Example of a Response Offer
FIGURE
12.3
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
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




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
What’s Happening?
 http://www.youtube.com/watch?v=WUFSHzT2x
uY
 http://www.youtube.com/watch?v=7DR4jkMFfR
g&feature=youtube_gdata_player
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
http://www.youtube.com/watch?v=9ITQ1aTcoAo
Coupon Redemption Rates
Type of coupon
 Instant redeemable
 Bounce-back
 Instant redeemable – cross ruff
 Electronic shelf
 Electronic checkout
 In-pack
 On-pack
 Direct mail
 Handout
 Free-standing inserts
Source: Santella & Associates
Percent Redeemed
39.3%
17.2%
17.1%
10.2%
7.8%
5.8%
4.7%
3.5%
3.1%
1.3%
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-mail
 In or on-package
 Store or manufacturer
 Self-liquidating
FIGURE
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.
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.
FIGURE
12.7
Reasons for Using Bonus Packs
 Increase usage of the

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


product
Match or pre-empt
competitive actions.
Stockpiling of product.
Develop customer loyalty.
Attract new users.
Encourage brand
switching.
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
Trade Allowances
Trade Incentives
Trade
Promotions
Trade Contests
Trade Shows
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
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cases
Costs
Over-reliance to push merchandise
Difficult to reduce – competitive pressures
Potential erosion of brand image