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Chapter Overview• Types of consumer
promotions• Planning for consumer
promotions• Business-to-business
promotions• International consumer
promotions
11Consumer Promotions
Prof. (Dr.) Kao Kveng Hong, PhD, D.Litt
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Coupons
How often do you use coupons?
What products do you tend to use coupons to purchase?
Will a coupon affect which brand you buy?
Why do you think companies offer so many coupons to consumers?
Discussion Slide
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• Coupons• Premiums• Contests and sweepstakes• Refunds and rebates• Sampling• Bonus packs• Price-offs
F I G U R E 1 1 . 1Types of Consumer Promotions
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A coupon accompanies this informational Gold Bond advertisement
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Influencing Brand Purchases
• Sampling 7.78• Word-of-mouth 7.18• Coupons 5.91• Advertising 5.61• Contests 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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Percentage of Sales with a Coupon
• Disposable diapers 17.1%• Detergents 15.0%• Meal starters 14.2%• Dough products (refrigerated) 13.6%• Cereal 13.4%• Wrapping materials, bags 12.8%• Oral hygiene products 11.7%• Household cleaners 11.7%
Product category % of sales using manufacturer’s coupon
Source: AC Nielson Scantrack, Santella & Associates
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• Print media (88%)• FSI (80%)
• Direct mail (4%) • On, in or near package (3%)
• Cross-ruff
• Other methods (5%)• In-store• Sampling• Scanner-delivered• Response offer• Internet• Fax• Sales staff
F I G U R E 1 1 . 2Methods of Distributing Coupons
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Types of Coupons
• Instant redemption
• Scanner-delivered
• Cross-ruffing• Response offer• U-pons
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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 Avg. Redemption Rate
Source: Santella & Associates
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Problems with Coupons
• Reduced revenues• Mass cutting• Counterfeiting• Misredemption• Dependency
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Factors Affecting Coupon Effectiveness
• Face value of coupon.• Distribution method.• Coupon for preferred brand or brand in
evoked set.
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INTEGRATED LEARNING EXPERIENCESTOP
Coupons.com, Inc.Http://www.coupons.com/Advertising.asp
Coupon Country/Kaufman AdvertisingHttp://www.couponcountry.com
Coupon Distribution and Marketing Services
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Types of Premiums
• Free-in-the-mail• In- or on-package• Store or manufacturer• Self-liquidating
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Fisher BoyFree, in-the-mail premium
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Fast-food chains are well known for their in-store premiums.
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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 1 . 3Keys to Successful Premiums
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Creating Successful Contests and Sweepstakes
• Know the legal restrictions.• Do we want losers?• Must overcome clutter.• Find the right combination of prizes.• Look for tie-in opportunities with special
events or other companies.• Must be coordinated with POP Displays
and other marketing tools.
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INTEGRATED LEARNING EXPERIENCESTOP
• Sweepstakes Builder• Http://
www.sweepstakesbuilder.com
• Promotions Activators, Inc.• Http://
www.promotionactivators.com
• ADPAC Corporation• Http://www.adpaccorp.com
• How can these firms assist in the development of a contest or sweepstake?
• What other promotional services can they provide?
• What are the advantages and disadvantages of using one firm for multiple or all of the consumer promotions?
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Successful Rebate/Refund Programs
• Visibility is necessary• Encourages customers to act• Should not be too complicated• Avoid becoming a permanent
component of the purchase decision (automobile rebates)
• Should be easy and profitable for retailers
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• In-store distribution• Direct sampling• Response sampling• Cross-ruff sampling• Media sampling• Professional sampling• Selective sampling
F I G U R E 1 1 . 4Types of Sampling
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ExperimentImpact of In-Store Sampling
• Meat product A 100% 430% 110%• Meat product B 100% 590% 123%• Meat product C 100% 185% 100%• Bread product 100% 170% 90%• Biscuit product A 100% 359% 64%• Biscuit product B 100% 201% 49%
Product Previous 4 weeks Sampling Week Following 4 weeks
Source: Michelle Lawson, Dalton McGuinness and Don Esslemont, “The Effect of In-Store Sampling on the Sale of Food Products,” Marketing Bulletin, 1990, Vol. 1, pp 1-6.
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ExperimentImpact of In-Store Sampling on Competitors
• Bread product 100% 170% 90%• Competitor A 100% 106% 105%• Competitor B 100% 79% 93%• Competitor C 100% 78% 86%
Product Previous 4 week Sampling week Following 4 weeks
Source: Michelle Lawson, Dalton McGuinness and Don Esslemont, “The Effect of In-Store Sampling on the Sale of Food Products,” Marketing Bulletin, 1990, Vol. 1, pp 1-6.
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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?
• What type of consumers would you target for the sampling?
• Fitness center• Ice cream• Dental service• Clothing manufacturer• Auto repair service• Office supply store• B-to-B consulting service• B-to-B supplier of raw
materials such as sugar, flour, etc. to bakeries.
Discussion Slide
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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 1 1 . 5Reasons 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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Impact of Price-off on Consumer Purchase
Source: “Studies Indicate Coupons are an Effective Promotional Tool,” Santella & Associates(http://www.santella.com/coupon.htm)
Consumer unaware item was on sale.51%
Consumer purchased because of sale price9%
Consumer would have purchased item anyway40%
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Promotion Combinations
• Over-lay• Intra-company tie-in• Inter-company tie-in
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Types of Consumers
• Promotion prone consumers• Brand loyal consumers• Price sensitive consumers
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INTEGRATED LEARNING EXPERIENCESTOP
• What type of sales promotions are offered?
• What do you think are the objectives of the consumer promotions?
• Are the promotions offered on the Web site consistent with their advertising and promotions offered at retail outlets?
Consumer Promotions on the Internet
Quaker State Http://www.quakerstate.com
Taco Bell Http://www.tacobell.com
Kraft Foods Http://www.kraft.com
Jockey Http://www.jockey.com
Avon Http://www.avon.com
Lee Jeans Http://www.leejeans.com
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Business-to-Business Consumer Promotions
• 18.7% of B-to-B marketing budgets spent on sales promotions.
• Coupons• Premiums• Sweepstakes and contests• Sampling• Bonus packs
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International Consumer Promotions
• Difficult to centralize consumer promotion programs.
• Laws vary across countries.• Difference in distribution rates• Requires an experienced international sales
promotion coordinator.
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Redemption Rates Distribution Methods
Media Redemption Rate Distribution Method
England Italy Spain U.S. England Italy Spain U.S.
Newspaper 1.9% ----- 1.4% 0.8.% 26% ----- 10.0% 1.9%
Magazine 2.8% 1.4% 1.4% 0.3% 13% 5.7% 14.7% 4.2%
Door to door 11.0% 13.7% 12.9% ----- 18% 2.0% 43.0% -----
In/on pack 25.1% 20.3% 30.7% 9.2% 15% 63.2% 25.2% 2.5%
In store 27.7% 32.3% 28.2% 6.8% 19% 22.1% 5.5% 1.9%
FSI 12.0% ----- ----- 1.4% 1% ----- ----- 85.4%
Mailing ----- 6.6% ----- 3.6% ----- 6.5% ----- 1.1%
Overall average 6.8% 14.3% 16.0% 2.0%
Sources: "International Coupon Trends," Direct Marketing, Volume 56, Issue 4 (August 1993),pp. 47-49; "FSI Coupon Redemption Rate for Frozen Foods," Frozen Food Age, Volume 47,Issue 3 (October 1998), p. 70.
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• Choose the best promotions for your product and desired product image.
• Ensure there is a synergy between the advertising plan, trade promotions and consumer promotions.
• Select an agency to design and handle the consumer promotion program.
Building Your IMC Campaign
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