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PowerPoint Presentation by Charlie Cook The University of West Alabama Eighth Edition © 2010 South-Western, a part of Cengage Learning All rights reserved.

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Presentation on theme: "PowerPoint Presentation by Charlie Cook The University of West Alabama Eighth Edition © 2010 South-Western, a part of Cengage Learning All rights reserved."— Presentation transcript:

1 PowerPoint Presentation by Charlie Cook The University of West Alabama Eighth Edition © 2010 South-Western, a part of Cengage Learning All rights reserved. Premiums and Other Promotions CHAPTER 17 INTEGRATED MARKETING COMMUNICATIONS IN ADVERTISING AND PROMOTION

2 1.Understand the role of premiums, the types of premiums, and the developments in premium practice. 2.Recognize the role of price-off promotions and bonus packages. 3.Be aware of the role of rebates and refund offers. 4.Know the differences among sweepstakes, contests, and games, and the reasons for using each form of promotion. 5.Understand the role of continuity promotions. 1.Understand the role of premiums, the types of premiums, and the developments in premium practice. 2.Recognize the role of price-off promotions and bonus packages. 3.Be aware of the role of rebates and refund offers. 4.Know the differences among sweepstakes, contests, and games, and the reasons for using each form of promotion. 5.Understand the role of continuity promotions. Chapter Objectives After reading this chapter you should be able to: © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–2

3 6.Appreciate retailer-driven promotions. 7.Evaluate the potential effectiveness of sales promotion ideas, and appraise the effectiveness of completed promotional programs. 6.Appreciate retailer-driven promotions. 7.Evaluate the potential effectiveness of sales promotion ideas, and appraise the effectiveness of completed promotional programs. Chapter Objectives (contd) After reading this chapter you should be able to: © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–3

4 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–4 Premiums PremiumsPremiums Are articles of merchandise or services offered as a gift to induce action by consumers, retailers, and the sales force 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 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 Are provide to increase consumer brand loyalty and to motivate new purchases

5 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–5 Major Consumer-Oriented Promotions Table 17.1

6 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–6 Premiums Free-with- Purchase Premiums Delayed reward to consumers primarily designed to generate trial purchasesDelayed reward to consumers primarily designed to generate trial purchases Perceived value of a premium item, or gift, depends on the value of brand offering giftPerceived 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.Delayed reward to consumers primarily designed to generate trial purchases. Few consumers exposed to free mail-in offers take advantage of the opportunitiesFew 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 attachedOffer a free item of immediate value inside or attached Provide the retail trade with premium item that retailers then give to consumersProvide the retail trade with premium item that retailers then give to consumers Are less expensive due to no additional packagingAre less expensive due to no additional packaging

7 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–7 Illustration of a Mail-in Premium Figure 17.1

8 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–8 Premiums Buy X, Get 1 Free Offers Represents an immediate reward to consumers, and, for manufacturersRepresents an immediate reward to consumers, and, for manufacturers Rewards a brands loyal customers or encourages trial from purchasers of competitive brands who are willing to switch in order to save moneyRewards a brands 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 itemConsumer mails in proof-of-purchase with sufficient money to receive the premium item Premium should be appealing and represent a valuePremium should be appealing and represent a value Phone Cards Repeat-purchasing objectiveRepeat-purchasing objective Delayed rewardDelayed reward Preset amount of calling timePreset amount of calling time

9 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–9 What Makes a Good Premium Offer? Attractive PremiumsAttractive Premiums The choice of premium object and delivery method based on an explicit detailing of what is to be accomplished 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 brands image and appropriate for the target market Premium items must be compatible with the brands image and appropriate for the target market

10 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–10 Price-Offs Price-Offs Marketing Objectives:Price-Offs Marketing Objectives: To reward present brand users To reward present brand users To get consumers to purchase larger quantities than normal To get consumers to purchase larger quantities than normal To establish repeat purchases To establish repeat purchases To ensure promotion dollars reach consumers To ensure promotion dollars reach consumers To obtain off-shelf display space To obtain off-shelf display space To provide the sales force with incentives To provide the sales force with incentives

11 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–11 Price-Offs (contd) Federal Trade Commission (FTC) Price-Off RegulationsFederal Trade Commission (FTC) Price-Off Regulations Price-off labels can only used on distributed brands with established retail prices Price-off labels can only used on distributed brands with established retail prices Limit to three price-off labels per year per brand size Limit to three price-off labels per year per brand size Required hiatus period (at least 30 days) between price-off promotions Required hiatus period (at least 30 days) between price-off promotions No more than 50% of annual volume from promotion No more than 50% of annual volume from promotion Manufacturer must provide display materials Manufacturer must provide display materials Dealer required to show regular and promotion prices Dealer required to show regular and promotion prices

12 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–12 Bonus Packs Bonus PacksBonus Packs Are extra quantities of a product that are offered for the same price Are extra quantities of a product that are offered for the same price Offer an alternative to price-off deals Offer an alternative to price-off deals Will be purchased by regular customers who would have purchased the brand anyway Will be purchased by regular customers who would have purchased the brand anyway Load current users; thereby removing them from the market Load current users; thereby removing them from the market

13 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–13 Games Promotional GamesPromotional Games Provide an instant reward Provide an instant reward Create excitement, stimulate brand interest, and reinforce brand loyalty 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 Must avoid snafus that threaten consumer confidence in the security of game operations and the integrity of game outcomes

14 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–14 Rebates and Refunds Rebate (also Refund)Rebate (also Refund) Refers to the practice in which manufacturers give cash discounts or reimbursements to consumers who submit proofs of purchase 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 Offers consumers delayed rather than immediate value, since the consumer must wait to receive the reimbursement That goes unredeemed is a phantom rebate That goes unredeemed is a phantom rebate Can attract switchers from competitive brands who avail themselves of attractive discount offers Can attract switchers from competitive brands who avail themselves of attractive discount offers

15 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–15 Illustration of a Rebate Offer Figure 17.2

16 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–16 Rebate Fraud Manufacturers Retailers Consumers Sources of Rebate Fraud

17 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–17 Sweepstakes Sweepstakes (Sweeps)Sweepstakes (Sweeps) A promotion in which winners are determined purely on the basis of chanceproofs of purchase cannot be required as a condition for entry A promotion in which winners are determined purely on the basis of chanceproofs of purchase cannot be required as a condition for entry Sweepstakes as a Promotional ToolSweepstakes as a Promotional Tool Are relatively inexpensive and simple to execute Are relatively inexpensive and simple to execute Reinforce brand positioning and image Reinforce brand positioning and image Attract attention to advertisements Attract attention to advertisements Promote increase brand distribution at retail Promote increase brand distribution at retail Foster sales force enthusiasm Foster sales force enthusiasm Can reach special groups Can reach special groups

18 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–18 Illustration of a Sweepstakes Offer Figure 17.3

19 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–19 Illustration of another Sweepstakes Offer Figure 17.4

20 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–20 Contests ContestsContests 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 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 ContestsOnline Sweeps and Contests Are growing in importance Are growing in importance Direct consumers to register online to participate in sweeps or contests 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 brands opt- in database Create brand awareness, build consumer interaction with a brand, and enable expansion of a brands opt- in database

21 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–21 Illustration of a Promotional Contest Figure 17.5

22 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–22 Continuity Promotions Continuity PromotionsContinuity Promotions Reward consumers repeat purchasing behaviors Reward consumers repeat purchasing behaviors Loyalty programs Loyalty programs Point programs Point programs Serve to cement a long-term relationship with the consumer Serve to cement a long-term relationship with the consumer

23 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–23 Overlay and Tie-In Promotions Overlay (Combination) ProgramOverlay (Combination) Program Is the simultaneous use of multiple promotion tools to promote a brand or to promote brands cooperatively from different firms 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 Printed coupon with an mail-in entry contest form Increases the likelihood that consumers will attend a promotional message that cuts through clutter Increases the likelihood that consumers will attend a promotional message that cuts through clutter

24 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–24 Overlay and Tie-In Promotions (contd) Tie-in (Group) PromotionTie-in (Group) Promotion Is the simultaneous promotion of multiple brands in a single intracompany or intercompany (joint) promotional effort Is the simultaneous promotion of multiple brands in a single intracompany or intercompany (joint) promotional effort Branded pizza and branded soft drink combination offers Branded pizza and branded soft drink combination offers Is cost-effective, but lead time is lengthened Is cost-effective, but lead time is lengthened Should reinforce partners images of each other Should reinforce partners images of each other

25 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–25 Illustration of an Intracompany Tie-In Figure 17.6

26 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–26 Illustration of an Intercompany Tie-In Promotion Figure 17.7

27 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–27 Implementation Problems for Tie-in Promotions To reduce potential problems:To reduce potential problems: The profiles of each partners customers must be similar with regard to demographics The profiles of each partners customers must be similar with regard to demographics The partners images must reinforce each other The partners images must reinforce each other The partners must be willing to cooperate rather than imposing their own interests The partners must be willing to cooperate rather than imposing their own interests

28 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–28 Retailer Promotions Increase store traffic Offer price discounts and deals Build customer loyalty Purposes of Retailer Promotions

29 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–29 Retailer Promotions Retail Coupons Frequent- shopper Programs Special Price Deals Samples and premiums Types of Retailer Promotions

30 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–30 Evaluating Sales Promotion Ideas Procedure for Evaluating Promotion IdeasProcedure for Evaluating Promotion Ideas 1. Identify specific objectives for the promotion 2. Achieve agreement on objectives 3. Evaluate (rate) the idea: Is it a good one? Does it meet objectives? Is it a good one? Does it meet objectives? Does it appeal to its target market? Does it appeal to its target market? Is it unique and different from the competition? Is it unique and different from the competition? Is the idea presented clearly to its market? Is the idea presented clearly to its market? Is it cost-effective? Is it cost-effective?

31 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–31 Postmortem Analysis Efficiency Expense Effectiveness Equity Enhancement Execution Ease

32 © 2010 South-Western, a part of Cengage Learning. All rights reserved.17–32 Evaluation of Three Completed Promotional Programs Table 17.2 Program j =A just-completed promotional program E ij = Evaluation of the j th promotional program on the i th evaluation factor (i.e., the efficiency factor, the executional ease factor, etc.) W i =Weight, or relative importance, of the i th factor in determining promotion success


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