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Chapter Overview

• Types of consumer promotions

• Planning for consumer promotions

• Business-to-business promotions

• International consumer promotions

11Consumer Promotions

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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

11

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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 Boy

Free, 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.sweepstakesbuil

der.com

• Promotions Activators, Inc.• Http://www.promotionactivat

ors.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