Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall 12 Chapter Twelve Sales Promotions 12-1

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Coupons Premiums Contests and sweepstakes Refunds and rebates Sampling Price-offs F I G U R E Types of Consumer Promotions 12-2

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Coupons 323 billion distributed Coupon usage 78% of households use 64% willing to switch brands 12-3

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall F I G U R E Percentage of Consumers and Coupon Usage Source: Karen Holt, “Coupon Crimes,” Promo, Vol. 17, No. 5 (April 2004), pp

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall A coupon accompanies this informational Gold Bond advertisement. 12-5

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Influencing Brand Purchases Sampling7.78 Word-of-mouth7.18 Coupons5.91 Advertising5.61 Contests1.24 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 ( 12-6

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Percentage of Sales with a Coupon Disposable diapers17.1% Detergents15.0% Cereal13.4% Wrapping materials, bags12.8% Oral hygiene products11.7% Household cleaners11.7% Product category % of sales using manufacturer’s coupon Source: AC Nielson Scantrack, Santella & Associates 12-7

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Print media (90%) Direct mail On- or in-package In-store Sampling Internet Sales staff F I G U R E Methods of Distributing Coupons 12-8

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Print Coupons Consumers must make conscious effort to clip coupon Creates brand awareness Must purchase brand on next trip to retailer More likely to recall brand name 12-9 Reasons for using:

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Problems with Coupons Reduced revenues Used by brand preference consumers (80%) “Necessary evil” $500 million illegally redeemed Counterfeiting Misredemption 12-10

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Types of Premiums Prizes & Gifts Free-in-th In- or on-package Store or manufacturer 12-11

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Premium Offer Click picture for video. An ad by Haik Humble Eye Center offering a premium with the purchase of custom pair of eye glasses

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Match the premium to the target market Carefully select the premiums Avoid fads, try for exclusivity Pick premium that reinforces firm’s product and image Integrate the premium with other IMC tools especially advertising and POP displays Don’t expect premiums to increase short-term profits (more image than profits) Source: Based on Don Jagoda, “The Seven Habits of Highly Successful Premiums,” Incentive, (August 1999), Vol. 173, Issue 8, pp F I G U R E Keys to Successful Premiums 12-13

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Fast-food chains are well known for their in-store premiums

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Contests and Sweepstakes Contests – require activity, skill Require purchase to enter Some states illegal Sweepstakes – random chance Must publish odds of winning Cannot require purchase 12-15

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Refunds and Rebates Refunds are smaller Rebates are larger Hassle to redeem Now expected by consumers Redemption rates 30% overall 65% for rebates over $

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall In-store distribution Direct sampling Cross-ruff sampling (one product on another) Media sampling (in a magazine) Professional sampling (doctors) Selective sampling F I G U R E Types of Sampling 12-17

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Benefits of Sampling Introduce new products Generate interest Generate leads Collect information Boost sales 12-18

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Sampling Programs Problems Cost Distribution Effective sampling Stimulate trial usage Target the right audience 12-19

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Price-Offs Temporary price reduction Stimulating sales Reduces financial risk Brand switching Stockpiling 12-20

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Price-Offs Proven to be successful Appeal of monetary savings Reward is immediate Problems Can have a negative impact on profit Encourages consumers to become more price-sensitive Potential image on brand image 12-21

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Impact of Price-off on Consumer Purchase Source: “Studies Indicate Coupons are an Effective Promotional Tool,” Santella & Associates ( Consumer unaware item was on sale. 51% Consumer purchased because of sale price 9% Consumer would have purchased item anyway 40% 12-22

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Planning Consumer Promotions Promotion Prone Brand Loyal Price Sensitive

Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall Retail Incentives Consumer Promotions Increase store traffic Increase store sales Attract new customers Increase the basket size 12-24