CHAPTER © 2010 South-Western, a part of Cengage Learning All rights reserved 17 Premiums and Other Promotions Eighth Edition PowerPoint Presentation by Charlie Cook The University of West Alabama 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 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 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  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 17–4 Table 17.1 Major Consumer-Oriented Promotions © 2010 South-Western, a part of Cengage Learning All rights reserved 17–5 Premiums Free-withPurchase Premiums • Delayed reward to consumers primarily designed to generate trial purchases • Perceived value of a premium item, or gift, depends on the value of brand offering gift Mail-In Offers • Delayed reward to consumers primarily designed to generate trial purchases • Few consumers exposed to free mail-in offers take advantage of the opportunities • Offer a free item of immediate value inside or attached • Provide the retail trade with premium item that retailers then give to consumers • Are less expensive due to no additional South-Western, a part of packaging In-, On-, and Near-Pack Premiums © 2010 Cengage Learning All rights reserved 17–6 Figure 17.1 Illustration of a Mail-in Premium © 2010 South-Western, a part of Cengage Learning All rights reserved 17–7 Premiums “Buy X, Get Free” Offers • Represents an immediate reward to consumers, and, for manufacturers • Rewards a brand’s loyal customers or encourages trial from purchasers of competitive brands who are willing to switch in order to save money Self Liquidating • Consumer mails in proof-of-purchase with sufficient money to receive the premium item • Premium should be appealing and represent a value • Repeat-purchasing objective • Delayed reward • a part of South-Western,Preset amount of calling time Phone Cards © 2010 Cengage Learning All rights reserved 17–8 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 17–9 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 17–10 Figure 17.3 Illustration of a Sweepstakes Offer © 2010 South-Western, a part of Cengage Learning All rights reserved 17–18 Figure 17.4 Illustration of another Sweepstakes Offer © 2010 South-Western, a part of Cengage Learning All rights reserved 17–19 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© 2010 South-Western, a part of in e-mail database Cengage Learning All rights reserved 17–20 Figure 17.5 Illustration of a Promotional Contest © 2010 South-Western, a part of Cengage Learning All rights reserved 17–21 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 17–22 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 17–23 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 17–24 Figure 17.6 Illustration of an Intracompany Tie-In © 2010 South-Western, a part of Cengage Learning All rights reserved 17–25 Figure 17.7 Illustration of an Intercompany Tie-In Promotion © 2010 South-Western, a part of Cengage Learning All rights reserved 17–26 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 17–27 Retailer Promotions Purposes of Retailer Promotions Increase store traffic Offer price discounts and deals © 2010 South-Western, a part of Cengage Learning All rights reserved Build customer loyalty 17–28 Retailer Promotions Types of Retailer Promotions Retail Coupons Frequentshopper Programs © 2010 South-Western, a part of Cengage Learning All rights reserved Special Price Deals Samples and premiums 17–29 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 17–30 Postmortem Analysis Expense Execution Ease Efficiency Equity Enhancement © 2010 South-Western, a part of Cengage Learning All rights reserved Effectiveness 17–31 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, © 2010 South-Western, a part of or relative importance, of the ith Cengage Learning factor in determining promotion success All rights reserved 17–32 ... additional South-Western, a part of packaging In-, On-, and Near-Pack Premiums © 2010 Cengage Learning All rights reserved 17–6 Figure 17.1 Illustration of a Mail-in Premium © 2010 South-Western, a... in proof-of-purchase with sufficient money to receive the premium item • Premium should be appealing and represent a value • Repeat-purchasing objective • Delayed reward • a part of South-Western,Preset... an Intracompany Tie-In © 2010 South-Western, a part of Cengage Learning All rights reserved 17–25 Figure 17.7 Illustration of an Intercompany Tie-In Promotion © 2010 South-Western, a part of