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12 Chapter Twelve
Sales Promotions
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Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall
• Coupons
• Premiums
• Contests and sweepstakes
• Refunds and rebates
• Sampling
• Price-offs
F I G U R E 1 2 . 1
Types of Consumer Promotions
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Coupons• 323 billion distributed
• Coupon usage• 78% of households use• 64% willing to switch brands
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Copyright © 2010 by Pearson Education, Inc. publishing as Prentice Hall
F I G U R E 1 2 . 2Percentage of Consumers and Coupon Usage
Always20.7%
Sometimes37.7%
Rarely17.0%
Never24.6%
Source: Karen Holt, “Coupon Crimes,” Promo, Vol. 17, No. 5 (April 2004), pp. 23-29.
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A coupon accompanies this informational Gold Bond advertisement.
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Influencing Brand Purchases
• Sampling 7.78• Word-of-mouth 7.18
• Coupons 5.91• Advertising 5.61• Contests 1.24
On a scale of 1 to 10, the following are the top five influences on the brand purchased by a consumer.
Source: The Second Annual Survey of Consumer Preferences for Product Sampling, Santella & Associates (Http://www.santella.com/marketing.htm).
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Percentage of Sales with a Coupon
• Disposable diapers 17.1%• Detergents 15.0%• Cereal 13.4%• Wrapping materials, bags 12.8%• Oral hygiene products 11.7%• Household cleaners 11.7%
Product category % of sales using manufacturer’s coupon
Source: AC Nielson Scantrack, Santella & Associates
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• Print media (90%)• Direct mail • On- or in-package• In-store• Sampling• Internet• Sales staff
F I G U R E 1 2 . 3Methods of Distributing Coupons
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Print Coupons
• Consumers must make conscious effort to clip coupon
• Creates brand awareness• Must purchase brand on next trip to retailer• More likely to recall brand name
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Reasons for using:
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Problems with Coupons
• Reduced revenues• Used by brand preference consumers (80%)
• “Necessary evil”• $500 million illegally redeemed
• Counterfeiting• Misredemption
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Types of PremiumsPrizes & Gifts
• Free-in-the-mail
• In- or on-package
• Store or manufacturer
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Premium Offer
Click picture for video.
An ad by Haik Humble Eye Center offering a premium with the purchase of custom pair of eye glasses.
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• Match the premium to the target market• Carefully select the premiums
• Avoid fads, try for exclusivity
• Pick premium that reinforces firm’s product and image• Integrate the premium with other IMC tools
• especially advertising and POP displays
• Don’t expect premiums to increase short-term profits (more image than profits)
Source: Based on Don Jagoda, “The Seven Habits of Highly Successful Premiums,” Incentive, (August 1999), Vol. 173, Issue 8, pp. 104-105.
F I G U R E 1 0 . 4
Keys to Successful Premiums
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Fast-food chains are well known for their in-store premiums.
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Contests and Sweepstakes
• Contests – require activity, skill• Require purchase to enter
• Some states illegal
• Sweepstakes – random chance• Must publish odds of winning• Cannot require purchase
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Refunds and Rebates
• Refunds are smaller
• Rebates are larger
• Hassle to redeem
• Now expected by consumers
• Redemption rates• 30% overall• 65% for rebates over $50
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• In-store distribution• Direct sampling• Cross-ruff sampling (one
product on another)• Media sampling (in a magazine)• Professional sampling (doctors)• Selective sampling
F I G U R E 1 2 . 6
Types of Sampling
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Benefits of Sampling
• Introduce new products
• Generate interest
• Generate leads
• Collect information
• Boost sales
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Sampling Programs
• Problems• Cost• Distribution
• Effective sampling• Stimulate trial usage• Target the right audience
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Price-Offs
• Temporary price reduction• Stimulating sales• Reduces financial risk• Brand switching• Stockpiling
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Price-Offs
• Proven to be successful• Appeal of monetary savings• Reward is immediate
• Problems• Can have a negative impact on profit• Encourages consumers to become more
price-sensitive• Potential image on brand image
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Impact of Price-off on Consumer Purchase
Source: “Studies Indicate Coupons are an Effective Promotional Tool,” Santella & Associates (http://www.santella.com/coupon.htm)
Consumer unaware item was on sale.51%
Consumer purchased because of sale price9%
Consumer would have purchased item anyway40%
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Planning Consumer Promotions
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Promotion ProneBrand Loyal
Price Sensitive
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Retail IncentivesConsumer Promotions
• Increase store traffic
• Increase store sales
• Attract new customers
• Increase the basket size
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