1. Premiums and Other Promotions
INTEGRATED MARKETING
COMMUNICATIONS
IN ADVERTISING AND PROMOTION
CHAPTER 17
Premiums and Other Promotions
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2. Chapter Objectives After reading this chapter you should be able to:
Understand the role of premiums, the types of premiums, and the developments in premium practice.
Recognize the role of price-off promotions and bonus packages.
Be aware of the role of rebates and refund offers.
Know the differences among sweepstakes, contests, and games, and the reasons for using each form of promotion.
Understand the role of continuity promotions.
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17–2

3. Chapter Objectives (cont’d) After reading this chapter you should be able to:
Appreciate retailer-driven promotions.
Evaluate the potential effectiveness of sales promotion ideas, and appraise the effectiveness of completed promotional programs.
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17–3

4. Premiums
Premiums
Are articles of merchandise or services offered as a gift to induce action by consumers, retailers, and the sales force
Represent versatile promotional tools that generate trial purchases, encourage repeat purchasing, and reinforce brand images
Are provide to increase consumer brand loyalty and to motivate new purchases
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5. Major Consumer-Oriented Promotions
Table 17.1
Major Consumer-Oriented Promotions
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6. Premiums Free-with-Purchase Premiums
Delayed reward to consumers primarily designed to generate trial purchases
Perceived value of a premium item, or gift, depends on the value of brand offering gift
Mail-In Offers
Delayed reward to consumers primarily designed to generate trial purchases.
Few consumers exposed to free mail-in offers take advantage of the opportunities
In-, On-, and Near-Pack Premiums
Offer a free item of immediate value inside or attached
Provide the retail trade with premium item that retailers then give to consumers
Are less expensive due to no additional packaging
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7. Illustration of a Mail-in Premium
Figure 17.1
Illustration of a Mail-in Premium
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8. Premiums “Buy X, Get 1 Free” Offers
Represents an immediate reward to consumers, and, for manufacturers
Rewards a brand’s loyal customers or encourages trial from purchasers of competitive brands who are willing to switch in order to save money
Self Liquidating
Consumer mails in proof-of-purchase with sufficient money to receive the premium item
Premium should be appealing and represent a value
Phone Cards
Repeat-purchasing objective
Delayed reward
Preset amount of calling time
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9. What Makes a Good Premium Offer?
Attractive Premiums
The choice of premium object and delivery method based on an explicit detailing of what is to be accomplished
Premium items must be compatible with the brand’s image and appropriate for the target market
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10. Price-Offs Price-Offs’ Marketing Objectives:
To reward present brand users
To get consumers to purchase larger quantities than normal
To establish repeat purchases
To ensure promotion dollars reach consumers
To obtain off-shelf display space
To provide the sales force with incentives
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11. Price-Offs (cont’d)
Federal Trade Commission (FTC) Price-Off Regulations
Price-off labels can only used on distributed brands with established retail prices
Limit to three price-off labels per year per brand size
Required hiatus period (at least 30 days) between price-off promotions
No more than 50% of annual volume from promotion
Manufacturer must provide display materials
Dealer required to show regular and promotion prices
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12. Bonus Packs Bonus Packs
Are extra quantities of a product that are offered for the same price
Offer an alternative to price-off deals
Will be purchased by regular customers who would have purchased the brand anyway
Load current users; thereby removing them from the market
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13. Games Promotional Games Provide an instant reward
Create excitement, stimulate brand interest, and reinforce brand loyalty
Must avoid snafus that threaten consumer confidence in the security of game operations and the integrity of game outcomes
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14. Rebates and Refunds Rebate (also Refund)
Refers to the practice in which manufacturers give cash discounts or reimbursements to consumers who submit proofs of purchase
Offers consumers delayed rather than immediate value, since the consumer must wait to receive the reimbursement
That goes unredeemed is a “phantom rebate”
Can attract switchers from competitive brands who avail themselves of attractive discount offers
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15. Illustration of a Rebate Offer
Figure 17.2
Illustration of a Rebate Offer
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16. Sources of Rebate Fraud
Manufacturers
Retailers
Consumers
Sources of Rebate Fraud
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17. Sweepstakes Sweepstakes (Sweeps) Sweepstakes as a Promotional Tool
A promotion in which winners are determined purely on the basis of chance—proofs of purchase cannot be required as a condition for entry
Sweepstakes as a Promotional Tool
Are relatively inexpensive and simple to execute
Reinforce brand positioning and image
Attract attention to advertisements
Promote increase brand distribution at retail
Foster sales force enthusiasm
Can reach special groups
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18. Illustration of a Sweepstakes Offer
Figure 17.3
Illustration of a Sweepstakes Offer
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19. Illustration of another Sweepstakes Offer
Figure 17.4
Illustration of another Sweepstakes Offer
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20. Contests Contests Online Sweeps and Contests
A promotion in which participants must act according to the rules of the contest and may or may not be required to submit proofs-of-purchase
Online Sweeps and Contests
Are growing in importance
Direct consumers to register online to participate in sweeps or contests
Create brand awareness, build consumer interaction with a brand, and enable expansion of a brand’s opt-in database
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21. Illustration of a Promotional Contest
Figure 17.5
Illustration of a Promotional Contest
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22. Continuity Promotions
Reward consumers’ repeat purchasing behaviors
Loyalty programs
Point programs
Serve to cement a long-term relationship with the consumer
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23. Overlay and Tie-In Promotions
Overlay (Combination) Program
Is the simultaneous use of multiple promotion tools to promote a brand or to promote brands cooperatively from different firms
Printed coupon with an mail-in entry contest form
Increases the likelihood that consumers will attend a promotional message that cuts through clutter
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24. Overlay and Tie-In Promotions (cont’d)
Tie-in (Group) Promotion
Is the simultaneous promotion of multiple brands in a single intracompany or intercompany (joint) promotional effort
Branded pizza and branded soft drink combination offers
Is cost-effective, but lead time is lengthened
Should reinforce partners’ images of each other
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25. Illustration of an Intracompany Tie-In
Figure 17.6
Illustration of an Intracompany Tie-In
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26. Illustration of an Intercompany Tie-In Promotion
Figure 17.7
Illustration of an Intercompany Tie-In Promotion
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27. Implementation Problems for Tie-in Promotions
To reduce potential problems:
The profiles of each partner’s customer’s must be similar with regard to demographics
The partner’s images must reinforce each other
The partners must be willing to cooperate rather than imposing their own interests
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28. Retailer Promotions Purposes of Retailer Promotions
Increase store traffic
Offer price discounts and deals
Build customer loyalty
Purposes of Retailer Promotions
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29. Frequent- shopper Programs Types of Retailer Promotions
Retail Coupons
Frequent- shopper Programs
Special Price Deals
Samples and premiums
Types of Retailer Promotions
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30. Evaluating Sales Promotion Ideas
Procedure for Evaluating Promotion Ideas
Identify specific objectives for the promotion
Achieve agreement on objectives
Evaluate (rate) the idea:
Is it a good one? Does it meet objectives?
Does it appeal to its target market?
Is it unique and different from the competition?
Is the idea presented clearly to its market?
Is it cost-effective?
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31. Postmortem Analysis Expense Execution Ease Efficiency
Effectiveness
Equity Enhancement
Execution Ease
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32. Evaluation of Three Completed Promotional Programs
Table 17.2
Evaluation of Three Completed Promotional Programs
Program j = A just-completed promotional program
Eij = Evaluation of the jth promotional program on the ith evaluation factor (i.e., the efficiency factor, the executional ease factor, etc.)
Wi = Weight, or relative importance, of the ith factor in determining promotion success
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