SYNOPSIS

OF
CONSUMER PROMOTION TOOLS
(SAMPLES, COUPONS, REBATES)

SUBMITTED TO:
Prof. P. BALAJI PRASAD

SUBMITTED TO:
K. ABDUL RAHIM
V. AJAY TEJA
T. AMMULU
G. BALAJI

CONSUMER PROMOTION TOOLS

Consumer sales promotions encompass a variety of short term promotional techniques designed
to induce customers to respond in some way. The most popular consumer sales promotions are directly
associated with product purchasing. These promotions are intended to enhance the value of a product
purchase by either reducing the overall cost of the product or by adding more benefit to the regular
purchase price.

1) SAMPLES:
Company provides samples of the product by mail, by retail store, attached in magazines.
Sampling is a sales promotion technique designed to provide a consumer with an opportunity to use a
brand on trial basis with little or no risk. Sampling includes any method used to deliver an actual or trialsized product to consumers. It is a very useful technique of promotion. Estimates suggest that nearly 90
percent of consumer-product companies use sampling in some manner and invest approximately 1.12
billion a year a study shows that consumers are very favorable towards sampling, with 43 percent
indicating that they would consider switching brands if they liked a free sample that was being offered.
Sampling is very useful for new products and in areas with weak market share for an established brand..
Ex: clinic plus provide samples of its shampoos in Big bazaar and attached with TIMES OF INDIA.

METHODS OF SAMPLING:
There six methods of sampling are mainly in use.

1. In-store sampling:
It is a method used for food products and cosmetics. Consumers at the point of purchase may be
swayed by a direct encounter with the brand.

2. Distribute the sample door-to-door:

Though it is expensive, it can be effective if the market is able to identify the correct market segment.
3. Samples are delivered through the postal services:
It is an expensive method of distribution and the sample must be small item to be economically
feasible.

4. Newspaper sampling:
This method is very popular for beauty and health care products.

5. On-or in-pack sampling:

Here the sample item is attached to another product package. In yet another method of sampling, the
sample is dispersed at malls -shopping centers, fair grounds and recreational areas.

6. Online sampling:
Brand managers are increasingly distributing samples online by using the services of companies that
specializes in online sample delivery.
In a study on the effectiveness of sampling conducted over 30000 households, it was found that
households who did not receive free samples, an average of about 11 percent made trial purchases and 32
percent households made repeat purchases of the brand. On the other hand these figures were 16 percent
and 36 percent respectively for families who received samples?

Sampling Problems:
Sampling is expensive.
Mass handling of samples can be mishandled by the postal service or other distributors
Samples distributed door to door or high traffic locations may suffer from wasted distribution and
not reach the hands of potential Customers
In- or on-pack sampling excludes consumers who do not buy the carrying brand. In-store
sampling often fails to reach sufficient number of consumers to justify its expense.
Consumers may misuse sampling
Pilferage can occur when samples are distributed through mail.
Trial offer, used for more expensive item, also aimed at inducing the users to buy the brand.
Exercise equipments, appliances, watches, hand tools and consumer electronics are typical of
items offered on a trial basis.
Segments chosen for this sales promotion technique may have high sales potential.

2) COUPONS:
A coupon is a promotional device that rewards consumers for purchasing the coupon-offering
brand by providing either rupees-off savings or free merchandise. Free merchandise offer typically comes
in the form of "buy 2, get 1 free" in which free item is either another unit of the same brand or a different
brand. A coupon entitles a buyer to a designated reduction in price for a product or service. In 1999
marketers invested $6.9 billion in coupons as a sales promotion technique.
Ex: Mr. White provides coupons inside the pack. Returned empty pack and get Rs.5/- off in next
purchase.

FORMS OF COUPONING:
1. Instantly redeemable coupons

2. Shelf-delivered coupons
3. Scanner-delivered coupons
4. Mail-delivered coupons
5. FSIs and other media delivered coupons
6. In- and on-pack coupons
7. Online couponing

Advantages of Coupons:
Coupons make it possible to give a discount to price sensitive customer while still selling
the product at full price to other consumers.
Coupons can induce brand switching.
A manufacturer can control price discounts through appropriate timing of coupons.
Coupon is an excellent method of stimulating repeat purchasing.
Coupons can get regular users to trade up with in brand array.

Disadvantages of Coupons
Marketers cannot control the redemption timing of coupons, which may affect its impact.
Heavy use of coupon by regular users of a firm's product reduces its profitability.
Couponing is very expensive (cost of production, distribution and handling charges is
nearly two-third of the face value of coupons)
Fraud is very common in the redemption of coupons.

3) REBATES
A rebate is a money back offer requiring a buyer to mail in a form requesting the money back from
the manufacturer rather than from the retailer. Marketers are fond of rebates because they provide an
alternative to the use of coupons and stimulate consumer purchase behaviour. Rebate offers can
reinforce brand loyalty, provide the sales force with something to talk about, and enable the
manufacturer to flag the package with a potentially attractive deal. Refund offers are used both by
CPG companies and durable goods companies. A recent survey of the packaged goods companies
revealed that 76 percent had used a money back offer. This technique is helpful to increase the
quantity of products purchased because it is offered for multiple and large packets. Moreover only 5
percent to 10 percent buyers bother to mail the rebate form and get the refund. Rebate offer
consumers delayed rather than immediate value, since the consumer must wait to receive the
reimbursement. In using these programmes, manufacturers achieve customer-holding objective by
encouraging consumers to make multiple purchases or by rewarding previous users with a cash
discount for again purchasing the manufacturers brand.
Rebate offers also attract switchers from competitive brands who avail themselves of attractive
discount offers.
Company provides a price reduction after purchase rather than at the real shop. Consumer sends a
proof of purchase to manufacturer who refunds part of purchase by mail.
Ex: cash back in city bank in flip kart.