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CHAPTER 17. Premiums and Other Promotions. Chapter Objectives After reading this chapter you should be able to:. Understand the role of premiums, the types of premiums, and the developments in premium practice. Recognize the role of price-off promotions and bonus packages.

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Premiums and other promotions

CHAPTER17

Premiums and Other Promotions

© 2010 South-Western, a part of Cengage LearningAll rights reserved.


Premiums and other promotions

Chapter ObjectivesAfter reading this chapter you should be able to:

  • Understand the role of premiums, the types of premiums, and the developments in premium practice.

  • Recognize the role of price-off promotions and bonus packages.

  • Be aware of the role of rebates and refund offers.

  • Know the differences among sweepstakes, contests, and games, and the reasons for using each form of promotion.

  • Understand the role of continuity promotions.

© 2010 South-Western, a part of Cengage Learning. All rights reserved.

17–2


Premiums and other promotions

Chapter Objectives (cont’d)After reading this chapter you should be able to:

  • Appreciate retailer-driven promotions.

  • Evaluate the potential effectiveness of sales promotion ideas, and appraise the effectiveness of completed promotional programs.

© 2010 South-Western, a part of Cengage Learning. All rights reserved.

17–3


Premiums

Premiums

  • Premiums

    • 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

    • Are provide to increase consumer brand loyalty and to motivate new purchases

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Table 17 1

Table 17.1

Major Consumer-Oriented Promotions

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Premiums1

Premiums

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Figure 17 1

Figure 17.1

Illustration of a Mail-in Premium

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Premiums2

Premiums

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


What makes a good premium offer

What Makes a Good Premium Offer?

  • Attractive Premiums

    • 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 brand’s image and appropriate for the target market

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Price offs

Price-Offs

  • Price-Offs’ Marketing Objectives:

    • To reward present brand users

    • To get consumers to purchase larger quantities than normal

    • To establish repeat purchases

    • To ensure promotion dollars reach consumers

    • To obtain off-shelf display space

    • To provide the sales force with incentives

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Price offs cont d

Price-Offs (cont’d)

  • Federal Trade Commission (FTC) Price-Off Regulations

    • Price-off labels can only used on distributed brands with established retail prices

    • Limit to three price-off labels per year per brand size

    • Required hiatus period (at least 30 days) between price-off promotions

    • No more than 50% of annual volume from promotion

    • Manufacturer must provide display materials

    • Dealer required to show regular and promotion prices

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Bonus packs

Bonus Packs

  • Bonus Packs

    • Are extra quantities of a product that are offered for the same price

    • Offer an alternative to price-off deals

    • Will be purchased by regular customers who would have purchased the brand anyway

    • Load current users; thereby removing them from the market

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Games

Games

  • Promotional Games

    • Provide an instant reward

    • 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

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Rebates and refunds

Rebates and Refunds

  • Rebate (also Refund)

    • 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

    • That goes unredeemed is a “phantom rebate”

    • Can attract switchers from competitive brands who avail themselves of attractive discount offers

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Figure 17 2

Figure 17.2

Illustration of a Rebate Offer

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Rebate fraud

Rebate Fraud

Sources of Rebate Fraud

Manufacturers

Retailers

Consumers

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Sweepstakes

Sweepstakes

  • Sweepstakes (Sweeps)

    • A promotion in which winners are determined purely on the basis of chance—proofs of purchase cannot be required as a condition for entry

  • Sweepstakes as a Promotional Tool

    • Are relatively inexpensive and simple to execute

    • Reinforce brand positioning and image

    • Attract attention to advertisements

    • Promote increase brand distribution at retail

    • Foster sales force enthusiasm

    • Can reach special groups

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Figure 17 3

Figure 17.3

Illustration of a SweepstakesOffer

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Figure 17 4

Figure 17.4

Illustration of another Sweepstakes Offer

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Contests

Contests

  • Contests

    • 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 Contests

    • Are growing in importance

    • 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 brand’s opt-in e-mail database

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Figure 17 5

Figure 17.5

Illustration of a PromotionalContest

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Continuity promotions

Continuity Promotions

  • Continuity Promotions

    • Reward consumers’ repeat purchasing behaviors

      • Loyalty programs

      • Point programs

    • Serve to cement a long-term relationship with the consumer

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Overlay and tie in promotions

Overlay and Tie-In Promotions

  • Overlay (Combination) Program

    • 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

    • Increases the likelihood that consumers will attend a promotional message that cuts through clutter

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Overlay and tie in promotions cont d

Overlay and Tie-In Promotions (cont’d)

  • Tie-in (Group) Promotion

    • Is the simultaneous promotion of multiple brands in a single intracompany or intercompany (joint) promotional effort

      • Branded pizza and branded soft drink combination offers

    • Is cost-effective, but lead time is lengthened

    • Should reinforce partners’ images of each other

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Figure 17 6

Figure 17.6

Illustration of an Intracompany Tie-In

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Figure 17 7

Figure 17.7

Illustration of anIntercompany Tie-In Promotion

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Implementation problems for tie in promotions

Implementation Problems for Tie-in Promotions

  • To reduce potential problems:

    • The profiles of each partner’s customer’s must be similar with regard to demographics

    • The partner’s images must reinforce each other

    • The partners must be willing to cooperate rather than imposing their own interests

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Retailer promotions

Purposes of Retailer Promotions

Increasestore traffic

Offer pricediscountsand deals

Build customerloyalty

Retailer Promotions

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Retailer promotions1

Retailer Promotions

Types of Retailer Promotions

Retail Coupons

Frequent-shopperPrograms

Special PriceDeals

Samples andpremiums

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Evaluating sales promotion ideas

Evaluating Sales Promotion Ideas

  • Procedure for Evaluating Promotion Ideas

    • Identify specific objectives for the promotion

    • Achieve agreement on objectives

    • Evaluate (rate) the idea:

      • Is it a good one? Does it meet objectives?

      • Does it appeal to its target market?

      • Is it unique and different from the competition?

      • Is the idea presented clearly to its market?

      • Is it cost-effective?

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Postmortem analysis

Efficiency

Expense

Effectiveness

Equity Enhancement

Execution Ease

Postmortem Analysis

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


Table 17 2

Table 17.2

Evaluation of Three Completed Promotional Programs

Program j=A just-completed promotional program

Eij = Evaluation of the jth promotional program on the ith evaluation factor (i.e., the efficiency factor, the executional ease factor, etc.)

Wi =Weight, or relative importance, of the ith factor in determining promotion success

© 2010 South-Western, a part of Cengage Learning. All rights reserved.


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