1. 11 Consumer Promotions Chapter Overview Types of consumer promotions
Planning for consumer promotions
Business-to-business promotions
International consumer promotions

2. 11 Coupons How often do you use coupons?
Discussion Slide 11
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?

3. Contests and sweepstakes Refunds and rebates Sampling Bonus packs
F I G U R E
Types of Consumer Promotions
Coupons
Premiums
Contests and sweepstakes
Refunds and rebates
Sampling
Bonus packs
Price-offs
Consumer Promotion = sales promotion
Will discuss in the following OH’s

4. A coupon accompanies this informational Gold Bond advertisement

5. Influencing Brand Purchases
On a scale of 1 to 10, the following are the top five influences on the brand purchased by a consumer.
Sampling
Word-of-mouth
Coupons
Advertising
Contests
Source: The Second Annual Survey of Consumer Preferences for Product Sampling, Santella & Associates (

6. Percentage of Sales with a Coupon
Product category % of sales using
manufacturer’s coupon
Disposable diapers %
Detergents %
Meal starters %
Dough products (refrigerated) 13.6%
Cereal %
Wrapping materials, bags 12.8%
Oral hygiene products %
Household cleaners %
Source: AC Nielson Scantrack, Santella & Associates

7. F I G U R E 1 1 . 2 Print media (88%) Direct mail (4%)
Methods of Distributing Coupons
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

8. Types of Coupons Instant redemption Scanner-delivered Cross-ruffing
Response offer
U-pons

9. Coupon Redemption Rates
Type of coupon Avg. Redemption Rate
Instant redeemable %
Bounce-back %
Instant redeemable – cross ruff 17.1%
Electronic shelf %
Electronic checkout %
In-pack %
On-pack %
Direct mail %
Handout %
Free standing inserts %
In 1999, 300 billion coupons were distributed and only 4.8 billion were redeemed (1.6% redemption rate)
Bounce back – coupon in side
Cross ruff – e.g., coupon for chips on dip
Electronic checkout – print coupons with receipt usually for competing product
Source: Santella & Associates

10. Problems with Coupons Reduced revenues Mass cutting Counterfeiting
Misredemption
Dependency
Reduced revenue- brand loyal customers redeem 80% of all coupons (these people would pay full price).
Mass cutting – a “fake” store collects and redeems coupons
Misredemption – e.g., take a coupon for a 12 oz box rather than 18 oz box of cereal
Consumers come to depend on them – can’t buy a pizza without one

11. Factors Affecting Coupon Effectiveness
Face value of coupon.
Distribution method.
Coupon for preferred brand or brand in evoked set.
Value – higher is better
Method – FSI is best
Coupons for preferred or evoked are more attractive

12. INTEGRATED LEARNING EXPERIENCE
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INTEGRATED LEARNING EXPERIENCE
Coupon Distribution and Marketing Services
Coupons.com, Inc.
Coupon Country/Kaufman Advertising

13. Types of Premiums Free-in-the-mail In- or on-package
Store or manufacturer
Self-liquidating
Mail – collect points, earn a prize
Store – toy with happy meal
Liquidating – 2 box tops and $3.99 for T-shirt (money pays for shirt and consumer also pays postage)

14. Fisher Boy
Free, in-th premium

15. Fast-food chains are well known for their in-store premiums.

16. F I G U R E 1 1 . 3 Match the premium to the target market.
Keys to Successful Premiums
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

17. 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.
Contests require someone to perform an activity
Clutter and indifference – lots of contests and lotteries – so what are the prizes? Is it worth my time?
Prizes – Super Bowl tickets – things $ can’t always buy
Tie-in – H&R Block contest – we’ll pay your taxes
May not boost sales but can help with brand awareness over time

18. INTEGRATED LEARNING EXPERIENCE
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INTEGRATED LEARNING EXPERIENCE
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?
Sweepstakes Builder
Promotions Activators, Inc.
ADPAC Corporation

19. 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
Redemption rates are 10-20%
Allows manuf to hold retail price

20. In-store distribution Direct sampling Response sampling
F I G U R E
Types of Sampling
In-store distribution
Direct sampling
Response sampling
Cross-ruff sampling
Media sampling
Professional sampling
Selective sampling
SAMPLING CAN BE COSTLY
Direct – mail samples
Response – consumer responds to ad to get sample sent to them
Cross-ruff – e.g., conditioner with shampoo
Media – e.g., perfume in magazine
Prof – Dr. gives patient free drug trials (my knee)
Selective – give away power bars at a basketball game

21. Experiment Impact of In-Store Sampling
Product Previous 4 weeks Sampling Week Following 4 weeks
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%
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.

22. Experiment Impact of In-Store Sampling on Competitors
Product Previous 4 week Sampling week Following 4 weeks
Bread product 100% 170% 90%
Competitor A 100% 106% 105%
Competitor B 100% 79% 93%
Competitor C 100% 78% 86%
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.

23. Discussion Slide
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.

24. F I G U R E 1 1 . 5 Increase usage of the product
Reasons for Using Bonus Packs
Increase usage of the product
Match or pre-empt competitive actions
Stockpiling of product
Develop customer loyalty
Attract new users
Encourage brand switching
Bonus – sell 6 pack of batteries with % bonus is the most typical

25. 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.
Need a 20% increase in sales to offset a 5% price reduction.
May result in more price sensitive customers.

26. Impact of Price-off on Consumer Purchase
Consumer purchased because of sale price 9%
Consumer unaware item was on sale.
51%
Consumer would have purchased item anyway
40%
Source: “Studies Indicate Coupons are an Effective Promotional Tool,” Santella & Associates (

27. Promotion Combinations
Over-lay
Intra-company tie-in
Inter-company tie-in
Overlay – e.g., sample and coupon

28. Types of Consumers Promotion prone consumers Brand loyal consumers
Price sensitive consumers

29. INTEGRATED LEARNING EXPERIENCE
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INTEGRATED LEARNING EXPERIENCE
Consumer Promotions on the Internet
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?
Quaker State
Taco Bell
Kraft Foods
Jockey
Avon
Lee Jeans

30. 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

31. International Consumer Promotions
Difficult to centralize consumer promotion programs.
Laws vary across countries.
Difference in distribution rates
Requires an experienced international sales promotion coordinator.

32. Redemption Rates Distribution Methods

33. Building Your IMC Campaign
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.