©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. 1 1 Consumer Sales Promotion: Premiums and Other Promotions

©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. 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. 2

©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. Chapter Objectives (contd) 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. 3

©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. Whopper Sacrifice: Is an Online Premium Worth 10 Friends? 4

©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. Classification of Major Consumer-Oriented Promotions 5

©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. 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. 6

©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. Figure 20.1: Illustration of a Mail-in Premium 7

©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. Price-Offs Price-off promotions: a reduction in a brands regular price. A price-off is clearly labeled as such on a package. Effective when a marketers 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 8

©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. 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 9

©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. 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 10

©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. 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 McDonalds 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 11

©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. Refunds and Rebates Refund Cash reimbursement for purchasing consumer packaged goods. Rebate Cash reimbursement for purchasing a durable good. 12

©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. Figure 20.2: Illustration of a Rebate Offer 13

©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. 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 receipts 14

©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. Sweepstakes and Contests Primarily to enhance a brands 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 15

©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. Figure 20.3: Illustration of a Sweepstakes Offer 16

©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. Figure 20.4: Illustration of Another Sweepstakes Offer 17

©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. Figure 20.5: Illustration of Promotional Contests 18

©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. 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 19

©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. Figure 20.6: Illustration of an Overlay Program 20

©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. Figure 20.7: Illustration of an Intercompany Tie-In Promotion 21

©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. 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 partners customers be similar 2.The partners images reinforce each other 3.The partners be willing to cooperate 22

©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. 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 23

©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. 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 24

©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. Example of a Store-Sponsored Game 25

©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. 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? 26

©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. Postmortem Analysis 27

©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. Evaluation of Three Completed Promotional Programs 28