consumer and trade promotions
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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 - PowerPoint PPT PresentationTRANSCRIPT
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CHAPTER 12
Consumer and Trade Promotions
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Consumer Promotions Defined
An incentive or an enticement that encourages a consumer to either select or purchase a product.
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Types of Consumer Promotions
CouponsPremiumsContests and sweepstakesRefunds and rebatesSamplingBonus packsPrice-offs
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Influencing Brand Purchases
Sampling 7.78Word-of-mouth 7.18Coupons 5.91Advertising 5.61Contests 1.24
On a scale of 1 to 10, the following are the top five influences on the brand purchased by a consumer.
Source: The Second Annual Survey of Consumer Preferences for Product Sampling, Santella & Associates (Http://www.santella.com/marketing.htm).
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Consumers and Sales Promotions
Targeted consumers are classified four ways:
Promotion prone consumersBrand loyal consumersPrice sensitive consumersBrand preference
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In-store distributionDirect samplingResponse samplingCross-ruff samplingMedia samplingProfessional samplingSelective sampling
F I G U R E 1 2.6Types of Sampling
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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?
Fitness center Ice cream Dental service Clothing manufacturer Auto repair service Office supply store
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Discussion Question
Page 334, Question 7
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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).
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Types of Coupons
Instant redemptionScanner-deliveredCross-ruffing/Co-
brandingResponse offerE-couponsBounce-back/return
coupon
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Example of a Response Offer
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Print media (90%) FSI (88%)
Direct mail On- or in-package In-store Sampling Scanner-delivered Cross-ruffing Response offer Internet Fax Sales staff
F I G U R E 1 2 . 3Methods of Distributing Coupons
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What’s Happening?
http://www.youtube.com/watch?v=WUFSHzT2xuY
http://www.youtube.com/watch?v=7DR4jkMFfRg&feature=youtube_gdata_player
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Do Coupons have an Impact?
In 2007 in the United States:323 billion distributed3 billion redeemed (0.93%)Average value was 89 centsSavings of $3.47 billionCoupon usage
78% of households use 64% willing to switch brands http://www.youtube.com/watch?v=9ITQ1aTcoAo
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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
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A coupon accompanies this informational Gold Bond advertisement
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Premiums
Prizes or gifts that consumers receive for purchasing products and services
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Fast-food chains are well known for their in-store premiums.
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Types of Premiums
Free-in-the-mailIn or on-packageStore or manufacturerSelf-liquidating
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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.
F I G U R E 1 2.5Keys to Successful Premiums
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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
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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.
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Increase usage of the product
Match or pre-empt competitive actions.
Stockpiling of product.Develop customer loyalty.Attract new users.Encourage brand
switching.
F I G U R E 12.7Reasons for Using Bonus Packs
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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.
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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
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Trade Promotions
• Account for 70% of marketing budget• Often 2nd largest expense• Account for 17.4% of gross sales
For Manufacturers
TradePromotions
Trade Allowances
Trade Incentives
Trade Contests
Trade Shows
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Concerns about Trade Promotions
Corporate reward structure due to sales quotas
Used for short-term sales goalsTend to be used outside of IMC Plans in many
casesCostsOver-reliance to push merchandiseDifficult to reduce – competitive pressuresPotential erosion of brand image