1. Consumer-Oriented Promotions: Sampling and Couponing
Chapter Eighteen
Consumer-Oriented Promotions: Sampling and Couponing

2. Chapter Eighteen Objectives
Appreciate the objectives of consumer-oriented sales promotions.
Recognize that many forms of promotions perform different objectives for marketers.
Know the role of sampling, the forms of sampling, and the trends in sampling practice.

3. Chapter Eighteen Objectives
Be aware of the role of couponing, the types of coupons, and the developments in coupon practices
Understand the coupon redemption process and misredemption.
Appreciate the role of promotion agencies.

4. Why Use Consumer Promotions?
Promotions accomplish goals that advertising by itself cannot. Consumers often need to be induced to buy now rather than later, to buy your brand rather than a competitor's, to buy more and to buy frequently.

5. Brand Management Objectives and Consumer Rewards
Three general categories of objectives
(1) Generating trial purchases
(2) Encouraging repeat purchases
(3) Reinforcing brand images

6. Marketer Objectives and Consumer Rewards
All promotion techniques provide consumers with rewards
Typically in the form of cash savings or free gifts
Consumers are more responsive to immediate than delayed rewards

7. Classifications of Promotion Methods

8. Caution is in Order!
The classification of promotional tools is necessarily simplified
Promotions are capable of accomplishing more than a single objective
Manufacturers use consumer-oriented sales also to leverage trade support
Coupons and premiums achieve different objectives depending on the specific form of delivery vehicle

9. Sampling Sampling The premier sales-promotion device for
generating trial usage by delivering an
actual- or trial-sized product to consumers

10. Sampling Mailed directly to households
Targeted by demographic characteristics or geodemographics
Direct mail
Newspapers and
magazines
Door to door by special
distribution crews
On- or in-pack sampling
High-traffic locations
In-store sampling
Internet sampling

11. Sampling
The Sunday newspaper is an increasingly attractive medium for broad-scale sampling
Direct mail
Newspapers and
magazines
Door to door by special
distribution crews
On- or in-pack sampling
High-traffic locations
In-store sampling
Internet sampling

12. Sampling Allows considerable targeting
Lower cost than in-store or direct-mail sampling
Short lead times
Direct mail
Newspapers and
magazines
Door to door by special
distribution crews
On- or in-pack sampling
High-traffic locations
In-store sampling
Internet sampling

13. Sampling
Uses the package of another product to serve as the sample carrier
Direct mail
Newspapers and
magazines
Door to door by special
distribution crews
On- or in-pack sampling
High-traffic locations
In-store sampling
Internet sampling

14. Sampling
On- or In-pack
Sampling

15. Sampling Shopping centers, movie theaters, airports, or special events
Direct mail
Newspapers and
magazines
Door to door by special
distribution crews
On- or in-pack sampling
High-traffic locations
In-store sampling
Internet sampling

16. Sampling
Provide product samples in grocery stores and other retail outlets for trial while consumers are shopping
The most frequent form
Direct mail
Newspapers and
magazines
Door to door by special
distribution crews
On- or in-pack sampling
High-traffic locations
In-store sampling
Internet sampling

17. Sampling Brand managers are increasingly distributing samples online
Specialized online sample delivery firms aid this process
Direct mail
Newspapers and
magazines
Door to door by special
distribution crews
On- or in-pack sampling
High-traffic locations
In-store sampling
Internet sampling

18. Major Sampling Practices
Targeting rather than mass distributing samples.
Using innovative distribution methods where appropriate
Undertaking efforts to measure sampling’s return on investment

19. How Effective is Sampling?: Estimating ROI

20. When Should Sampling Be Used?
Brand is demonstrably superior/has distinct relative advantages
Concept is difficult to communicate by advertising alone
Can afford to generate consumer trial quickly

21. Problems with Sampling
Expensive
Mishandling in distribution
Distributed to the wrong market
In- or on-package samples do not capture current non-consumers
Can fail to reach sufficient numbers of consumers to justify its expense
May be misused by customers
Pilferage

22. Couponing Coupon A promotional device that provides
cents-off to consumers upon its
redemption

23. A Buy One
Get One
Free
Coupon Offer

24. Couponing Background
Around 250 billion coupons are distributed annually in the United States.
Cost to U.S. marketers is about $7 billion a year.

25. Coupon Distribution Methods
Freestanding insert (FSI) is preferred
Valassis Inserts, News America Marketing
The establishment of cooperative coupon programs
Val-Pak Direct Marketing Systems

26. Economic Impact Face Value $1.00 Distribution and postage cost .40
Handling charge
Consumer misredemption cost
Internal prep and processing cost
Redemption cost
Total Cost $1.59

27. Is Couponing Profitable?
Households most likely to redeem coupons were also the most likely to buy the brand in the first place
However, companies have to offer coupons to prevent losing consumers to other brands that do offer coupons

28. Point of Purchase Couponing
Instantly Redeemable Coupons
Shelf- Delivered Coupons
Scanner- Delivered Coupons
Peelable from the package at the point of purchase
Represent an immediate reward
An alternative to price-off deals
Redemption rate about 30%

29. Point of Purchase Couponing
Instantly Redeemable Coupons
Shelf- Delivered Coupons
Scanner- Delivered Coupons
Instant Coupon Machines, Smart SourceTM
Machines are attached to the shelf alongside coupon-sponsoring brands
Redemption rate about 11%

30. Shelf-Delivered Coupons
Instant coupon machine
(so called SmartSource)

31. Point of Purchase Couponing
Instantly Redeemable Coupons
Shelf- Delivered Coupons
Scanner- Delivered Coupons
Catalina Marketing Corp. offers two programs
Reward is delayed
Potentially very effective because they provide a way to carefully target coupon distribution

32. Point of Purchase Couponing
Scanner- Delivered Coupons
Checkout Coupon
Checkout Direct
Delivers coupons based on the particular brands a shopper has purchased
Directed at competitive-brand users
Redemption rate about 9%

33. Point of Purchase Couponing
Scanner- Delivered Coupons
Checkout Coupon
Checkout Direct
A coupon for the sponsoring manufacturer’s brand is automatically dispensed for use on the shopper’s next purchase occasion
Directed at users who satisfy a manufacturer’s prescribed demographic or product-usage requirements

34. Mail/Media Delivered Coupons
Mail-Delivered Coupons
Highest household penetration
Highest redemption rate of all mass-delivered coupons (3.5%)
Increase the amount of product purchases
Relatively expensive
Inefficient and expensive for brands enjoying a high market share

35. Mail/Media Delivered Coupons
FSIs and Other Media-Delivered Coupons
87% of all coupons distributed via Sunday newspaper freestanding inserts
Broad exposure
Relatively cheaper
Reminder function
Advertising function
Redemption rate is very low
Don’t generate much trade interest
Susceptible to misredemption

36. In- and On- Pack Coupons
Included in- or on- product’s package
Cannot be removed at the point of purchase; It’s for next purchase
A coupon for one brand is promoted by another brand (crossruffing)
Has bounce-back value
No distribution costs
Redemption rates are higher
Delayed value to consumers
Don’t reach nonusers of the carrying brand

37. Online Couponing A number of Internet sites now distribute coupons.
Consumers print their own coupons, at no additional cost to the advertiser.
There is a great potential for fraud with these coupons that consumers can print themselves so it remains to be seen how popular this method will remain

38. Redemption Process and Misredemption
(F)
Manufacturer
Redemption Center
(A)
(E)
(D)
(B)
(C)
Consumers
Retailers
Clearinghouse
(M)
* Organized criminals
* Terrorists
* Media employees
* Crooked retailers
M: misredemption

39. The Consequences
Estimates of the misredemption have ranged from a low of 15% to a high of 40%. True misredemption rate is about 3 or 4% representing millions of dollars lost by manufacturers.

40. The Participants
Consumers present coupons that have expired, for items not purchased, or for a smaller size than specified by the coupon.
Clerks take the coupons to the store and exchange them for cash without making a purchase.
Store Management: retailers may boost profits by submitting extra coupons in addition to those redeemed legitimately.
Shady Clearinghouses engage in misredemption by combining illegally purchased coupons with real ones and certifying the batch as legitimate.

41. The Role of Promotion Agencies
Agencies that work with brand managers to formulate promotion strategies and implement tactical programs.
A new generation of promotion agencies emphasize online promotions.