Download Chapter 11 - Consumer Promotions

Consumer Promotions
Chapter 11 with Duane Weaver
CONSUMER PROMOTIONS
(a.k.a. sales promotions)…are the
incentives aimed at a firm’s
customers.
TYPES OF CONSUMER PROMOTIONS
• COUPONS
– Types:
•
•
•
•
Bounce Back
Scanner Delivered
Cross-Ruffing
Response Offer
– Issues:
• Reduces revenues (giving it away for no
reason)
• Mass-cutting (fraud)
• Counterfeiting (pay for phoney coupons)
• Misredemptions (clearinghouse redeems
even when customer does not)
TYPES OF CONSUMER PROMOTIONS
• PREMIUMS
– Types:
• Free-in-the-mail (gifts for buying)
• In/on-package (attached gifts… e.g.: toys)
• Store or manufacturer (provided at time of
purchase from store or manufac.)
• Self-liquidating (premium sold at cost to
consumer)
– Issues:
• Time (short life spans – popularity wanes)
• Cost (exclusivity increases demand and thus
higher prices for desired items)
TYPES OF CONSUMER PROMOTIONS
CONTESTS AND SWEEPSTAKES
Contest = participant must compete (activity needed)…often purchase
needed to enter
Sweepstake = no purchase required, chances of winning are
probability driven (a random draw). May have restrictions of one entry
per store, etc.
• Problems
– Costs
– Consumer Indifference
– Clutter
• How to Succeed
–
–
–
–
–
The right prize
Take advantage of special event
Should be coordinated with advertising
Goal should be to encourage customer traffic and boost sales
NOTE: brand awareness increases with multiple exposures to ads
or contests.
TYPES OF CONSUMER PROMOTIONS
REFUNDS AND REBATES
Cash returns offered after the purchase of a
product.
• Problems
– Costs (giving it up and admin. is up)
– Paperwork (much more work)
– Diminished Effectiveness (expected vs.
reward)
• How to Succeed
– Visibility
– Perceived Newness
– An Impact
TYPES OF CONSUMER PROMOTIONS
SAMPLING
Delivery of a product to consumers for their use and
consumption, normally offered free of charge.
• Problems
– Cost is high.
(Try BUZZ marketing in lieu?)
– Packaging must be congruent with full size
version for product recognition.
– Requires careful planning of distribution.
• How to Succeed
–
–
–
–
As part of IMC plan
Focus is to induce TRIAL USE
Most effective for NEW products or NEW versions
Can switch BRAND LOYALTY (up to 70%)
TYPES OF CONSUMER PROMOTIONS
BONUS PACKS
Additional or extra number of items included (20100% more, average = 30% more).
• Problems
– Consumers skeptical
• Small = not much added value
• Large = well it was priced too high to begin with
– COSTLY (amounts, packaging, shipping)
• How to Succeed
– If it is perceived as a bargain or value
– For ongoing products with high competition, it
can help maintain brand loyalty and reduce brand
switching at minimal cost (again it might be
giving it away too)
TYPES OF CONSUMER PROMOTIONS
PRICE OFFS
Temporary Reduction in price.
• Problems
– Devastating to PROFITS
– Can require at least 20% increase in sales to accommodate
for only a 5% reduction in price.
– Makes consumers more price sensitive (waiting to buy or
brand switching is inspired)
– It is a slippery slope!
• How to Succeed
– Best on products/services not normally discounted.
– Can increase store traffic and boost sales
(E.G.: lost litre concept to drive higher margin items)
– Appeals to customers Monetarily
– Immediate Reward Appeal
– Should be part of a more complete IMC plan, not standalone
Planning for Consumer Promotions
•
•
•
Promotion plan should be relative to a
specific Target Audience
Promotion plan should support brand
image and brand position
Segmenting customers based on Sales
Promotions:
1. Promotion prone customers
–
Coupons, price-off, or premium responsive
2. Brand-loyal customers
–
Ignore deals being offered from other brands, always
stays loyal
3. Price-sensitive customers
–
Price is primary driver…favour any type of promotion
that reduces price
THANK YOU!