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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.

slide2

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

slide3

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

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

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.