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Module 4
- 2. In this module… • Sales promotion – Consumer promotions • Coupons • Premiums • Contest & sweepstakes • Refunds & rebates • Sampling • Bonus packs • Price offs
- 4. IMC Advertising Tools Advertising Mgmt. Advtg. Design Frameworks and appeals Message strategies Media Selection Trade promotions Consumer promotions Personal Selling, Database Mktg & CRM PR, events, sponsorship s Promotion Tools Internet Marketing Evaluating an integrated marketing plan Integration Tools
- 5. Sales promotion Sales promotion is one level or type of marketing aimed either at the consumer or at the distribution channel (in the form of sales- incentives).
- 6. Sales promotion Introduce new product Clear out inventory Attract traffic Lift sales temporarily
- 9. Consumer promotions are incentives aimed at the firm’s consumers Consumer Promotions The primary goal of these type of promotions is to entice the consumer to take the final step and make the purchase
- 10. Coupons Premiums Contests & Sweepstake s Refunds & Rebates Sampling Bonus packs Price-offs Types of consumer promotions
- 11. COUPONS
- 12. A promotional tool in the form of a document that can be redeemed for a discount when purchasing goods or services. Coupons
- 13. Coupon types Instant Redemption are coupons where consumers can instantly redeem the coupon while making the purchase Bounce-back coupons placed inside packages so that consumers cannot redeem immediately. For repeat purchases Scanner Delivered Triggered by an item being scanned. Coupon is for a competitive product. Designed to encourage brand switching Cross-ruffing placement for coupon for one product on another product. Coupon for Maggi noodles on Maggi ketchups
- 14. Problems with coupons Mis-redemption when coupon for a particular SKU is applied to another SKU Mass-cutting coupons are “redeemed” through fraudulent, non-existant retail outlet Reduced revenues Consumers with strong preferences will redeem that brands coupons with next purchase. This reduces full price revenues Counterfeiting when coupons are copied and sent back to the manufacturer for reimbursements
- 15. PREMIUMS
- 16. Premiums are prizes, gifts or other special offers consumers receive when they purchase a product Premiums When a company offers a premium, the consumer pays a full price for the product or service, in contrast to coupons which give price reductions
- 17. Premium Types Free-in-mail To receive the gift, consumer must mail the proof of purchase to manufacturer who mails the gift to the consumer In-or-on-package small gifts or toys in the packaging. Consumer must buy the product to find out which premium it contains Store or manufacturer Gifts given by the store or manufacturer when the consumer buys the product. McD : toys with every Happy Meal Self Liquidating Consumer has to pay a price for the gift. E.g. Rs 1000 for the premium + two proofs of purchase. Called self- liquidating as Rs 1000 covers cost of premium
- 18. Problems with premiums • A short life span • Need to leverage a premium which is in vogue. By the time you roll out a program, the premium may no longer be in vogue • Cost of the premiums high • McD’s exclusive toy tie- ups leads to increase in cost of the end product
- 20. Contests vs. Sweepstakes Contests • Contests require the participant to perform some activity • The winner is selected on the basis of who provides the best or most correct answer • Often, contests require the participant to purchase to participate Sweepstakes • No purchase required to enter a sweepstakes • Consumers can enter as many times as they wish, though firms can restrict participation • Chances of winning based on probability
- 24. Problems with C & S Costs : Prizes, Forms, Legal statements, supportings, advertising, promotional activity. Costs of running a contest are very high Consumer Indifference : Consumers becoming increasingly indifferent as the number of contests are increasing exponentially
- 25. Problems with C & S Clutter : With the increase in the number of contests and so many legal and illegal places to participate in a game of chance, the idea of going to a store to participate in a contest is not at all appealing
- 27. Refunds & Rebates Refunds & rebates are cash returns offered to consumers or businesses following the purchase of a product Refund is cash return on soft goods like food or clothing. Rebate is cash return on hard goods like appliances
- 28. Refunds & Rebates The manufacturer then refunds a portion of the purchase price Consumers pay the full price but mail back some proof of purchase
- 29. Refunds & Rebates : Key Issues • Inconvenience associated with claiming a rebate • Costs & paper work involved. • Cost of refund of rebate is lost revenue from the sale price combined with mailing and record keeping costs
- 30. SAMPLE
- 31. Product Sample Product sample method is where the consumer is encouraged to try a product. Sample is actual deliver of the product to consumers for their consumption Most samples are provided as ‘freebies’. Normally along with the sample, a coupon or price-off incentive is also given to persuade the consumer to buy a larger SKU
- 32. Sample Sample is actual delivery of the product to consumers for their consumption
- 33. Sample Most samples are provided free of charge. Normally along with the sample, a coupon or price-off incentive is also given to persuade the consumer to buy a larger SKU
- 34. Types of sample In-store Samples are given to consumers inside the store Direct In case of direct sample, samples are mailed or delivered to the doors of consumers
- 35. Types of sample Response Made available to consumers who respond to media offers on TV or net Cross-ruff In this case samples of one product is provided on another
- 36. Types of sample Media When a sample is included in a media vehicle, it is referred to as media sampling Professiona l Samples delivered by professionals. Doctors who give drug samples to patients
- 37. Types of sample Selective When samples are distributed at selective sites, it is called selective sample
- 38. Sample : Key Issues The largest issue associated with Product sample is costs • Cost of special package • Cost of product • Sample mailing costs • Sample distribution costs • Promoters costs
- 39. BONUS PACKS
- 40. Bonus packs When additional or extra number of items are placed in a special product package it is called a bonus pack
- 41. Reasons for using bonus packs Increase usage of a product Pre-empt competition. With a large bonus pack offer, marketers can preempt competitive activity Discourages buying of competitive brands by encouraging stockpiling
- 42. Reasons for using bonus packs Reward consumers who are loyal to you by offering them free merchandise Bonus packs also a tool to attract new consumers into the category or brand Encourages brand switching. If one had to choose between buying a regular SKU and a special SKU, what would one do
- 43. Bonus packs : Key Issues • Bonus packs works when the offer is substantial as the consumer can visibly see the extra or free merchandise • Else a mere 10% extra merely creates cynical consumers
- 44. PRICE-OFFS
- 45. Price-offs Price-offs are temporary reduction in price of the product to the consumer Producing a label with price reduction pre-marked forces the retailer to sell the item at a reduced price This ensures that the price-off incentive is passed on to the consumer
- 46. Price-offs Price-offs work very well to stimulate sales of an existing product Price-offs also encourage consumers to try out new products as the lower price reduces the financial risk of making the purchase They encourage consumers to switch brands in a brand parity situation or when there is no strong loyalty
- 47. Reasons for using price off packs In cases where there is a strong brand preference, a price-off tends to encourage stockpiling or even increased usage of the product Not just the manufacturer, but the retailer can also initiate a price-off promotion. Done with an objective of increasing traffic to the store
- 48. Price offs: Key Issues Advantages • Easy to implement and does impact and increase sales Disadvantages • With an increase in sales, there is also a negative impact on profitability, on account of price-offs • Price-offs programs will ensure that consumers will become price sensitive over time
- 50. Planning for consumer promotions It is vital that care should be taken to ensure that promotions support the image and positioning of the brand To ensure this, it is critical to understand the target audience, the values of the target audience and their opinion regarding your brand and competing brands
- 51. Planning for consumer promotions In terms of promotions, consumers can be divided into 3 distinct categories
- 53. Consumer types Promotion prone consumers respond frequently to coupons, price-offs or premiums. Not brand loyal and buy into deals The opposite of this is a brand-loyal consumer. They tend to buy only one particular brand and do not give up on that even when there is a good deal
- 54. Consumer types For a price sensitive consumer price is the primary if not the only criteria in making a decision. Brand names are unimportant for them and they will not pay a premium for the brand name
- 55. END OF MODULE