Consumer promotions

Role in IMC
 Objectives

– Increasing consumption of an established

brand(Eg recipe books, Pepsi challenge )
– Attract non users, competitors users
– Defend current customers, stock brand, reduce
switching
– Targeting a specific market segment (Eg Golf
Tournaments – Luxury automobiles)
 Types of Consumer Promotions
• Coupon : Price reduction offer
Distributed thru Print/Free Standing Inserts (FSI), Direct
Mail, Package, In-store, Sampling, Internet, Sales staff etc
– Instant redemption coupons
– bounce-back coupons
– cross-ruffing
– scanner delivered
– response offer coupons
Problems : Reduced revenues, Counterfeiting, Mis-
redemptions
For effectiveness : Face Value, Distribution method, For
evoked brand / preferred brand/ new brand?
 Types of Consumer Promotions
• Premiums
Prizes, Gifts, Special offers when purchasing
products
Pays full price, no price reduction. Used to boost
sales
– Free-in-the mail premiums- gifts for purchase. To
submit proof
– In-or on package premiums - free gift inside the
pack/disguised; need to buy to find out
– Store premiums – by retailer / store level
 Types of Consumer Promotions
• Premiums
Problems : Time and Cost
For effectiveness : Timing , careful selection, match
premiums with TA/desires & interests, should not
be cheap trinkets, quality offer to retain image of a
firm, Integrate with other IMC tools (eg POP
displays)
Reinforces brand image
 Types of Consumer Promotions
• Contests and Sweepstakes
Increases traffic/ boost sales
Prizes desirable to entice consumers
Low/ Perceived /No value does not work
Perceived value greater- probability to participate better
Concept of Intrinsic and Extrinsic Value
Eg. Who Dares wins, KBC
Coordinate with advertising , POP displays and other
marketing tools
 Types of Consumer Promotions
• Contests and Sweepstakes
Problems
Costs : prize, entry form, legal back-up, ads, POPs etc
Consumer indifference
Clutter
Success factors
Right prize
Take advantage of the right event
Instant prizes (scratch & win cards)
 Types of Consumer Promotions
• Sampling
Actual delivery to encourage trail for new product or
current product for new TG
Usually free of charge
Coupon / price off incentive given later to persuade
purchase
In-store distribution, Direct Sampling / Selective Sampling,
Response Sampling, Cross Ruff sampling, Media
Sampling, Professional Samples, Selective Sampling
Development of special samples pack, mailing expense,
distribution expense
 Types of Consumer Promotions
• Bonus Packs
Extra placed in a special product pack
Reasons : Increase usage, match / preempt
competitive actions, Stockpile the product, Develop
Customer loyalty, Encourage brand switching (if
used the brand previously)
Consumer skeptical, additional costs to company
 Types of Consumer Promotions
• Price Offs
Temporary reduction in szie
Stimulate sales, entice consumers to try
Special occasions, Sales to reduce inventory
Requires 20% rise in sale to offset 5% price reduction!
Makes consumer price sensitive, Impact on brand
image
 Types of Consumer Promotions
• Tie-in Promotions
Cost effective : cost shared among multiple brand
Inter – company or intra-company tie-ups
(complimentary brands)
 Types of Consumer Promotions
• Loyalty Programs
Continuity/ Frequency Programs
Accumulate points; redeem for gifts and prizes; also
get to participate in contests, sweepstakes, special
offers, games etc
 Types of Consumer Promotions
• Refunds and Rebates
• A rebate is an amount paid by way of return on what has already been paid
by the customer for the purchase of a product or a service.
• A refund is the return of the entire money paid by a customer on the
purchase of a product or service. The amount returned by way of refund
may be due to dissatisfaction expressed by the customer or due to any
other valid reason.
• There is no element of dissatisfaction on the part of the customer in the
case of a rebate form of sales promotion. This is the main difference
between refund and rebate.
• Returns on purchase (proof) of product
Delayed results / value
Rebate on hard goods/ big value; Refunds on soft goods /small value
 Types of Consumer Promotions
• Event Sponsorship
Sponsorship relation with event
Higher visibility among TG
Built IMC program around events
Lack of research
Trade promotions

•Role in IMC
 Why not Sales promotion?
• Short term marketing planning
• Consumers may de-value it and purchase only on
sale . Decrease perceived value
• Clutter, cutting each other and eroding bottom line
• Forward buying , may not affect overall sales of the
company
• Abuse :theft, people redeem coupons for products
they have not bought, retailer sell free separate from
products !
 Nature of Trade promotion (TP)
• Incentives / expenditure used by manufacturers
and other marketing channel members to push
products
• Manufacturer - to convince another member to
carry its goods
• Wholesalers, distributors, brokers and agents – to
entice retailers to purchase products for eventual
sale
• Build strong relations
 Objectives of Trade promotion
• Obtaining initial distribution : Pull Vs Push
Strategy
• Obtaining prime retail shelf space / location
• Support established brands, increase shelf
space, competition
• Increase order sizes; building retail
inventories
• Support Consumer promotion program
 Effective Trade promotions
• Integral part of IMC program
• Tie-ins between ad campaign and trade
promotions program
• Useful in generating tangible sales and
other measurable outcomes
 Types of Trade Promotions
• Trade Allowances : To encourage channel
members to make the purchase
1) Off Invoice allowance : % discount on invoice to
increase profit margin. Encourage retailers to
purchase large quantities.
2) Buying Allowance : Discount given normally
within a specified date and minimum order qty
3) Drop-ship allowance : Paid to retailers to bypass
wholesalers, agents, brokers or distributors.
Benefits both! Needs careful handling.
 Types of Trade Promotions
• Trade Allowances
1) Slotting fees: Paid to retailers to stock new
products. To spend to add inventories/shelf
space. Unfair?
2) Exit fee : Current versions to be removed
from inventory, add new version
 Types of Trade Promotions
• Cash rebate
• A form of delayed value promotion for the
retailer. Only after the proof of performance is
furnished, the retailer is given a cheque for the
amount of discount.
• Free goods
• A deviation from straight price cut. In the form of
extra quantity of purchased product “free”. Free
goods deal often encourages resellers to stock
more during the promotion period..
 Types of Trade Promotions
• Trade Contests
To achieve sales targets
Contest prizes to brokers, retail sales
people, stores, wholesalers etc
Forms like : TV/ Electronic item/ car/ an
exotic holiday etc
 Types of Trade Promotions
• Trade Incentives : For performing a function . Tied
with consumer sales promotion
Push the product / brand and increase purchases
Push money : A monetary reward given to the sales-
force of the dealers to sell a manufacturers product
Tactics like awards in the form of travel, gifts, or
cash bonuses for reaching targeted sales levels
Eg Cooperative Merchandising Agreement (CMA)
Corporate Sales Program (CSP), Premium / bonus
pack
 Types of Trade Promotions
• CMA : No of ads by retailer with manufacturer
brand, enhance brand name in retailer’s in-
house offer, use of in-store displays on specific
days
• CSP : promotions across brand portfolio-
ready-to-use display pallets
 Types of Trade Promotions
• Training programs
To sales staff at retailer location. Knowledge of one
brand over other brands. Eg Financial Investment
/ Insurance agents
Special classes that feature product information,
demonstrations, and training about sales
techniques. Another method to give information
would be the use of videotapes and brochures.
Eg : Microsoft “Helping clients succeed”
 Types of Trade Promotions
• Vendor Support Programs
Bill back program : Display/ads/price-cut. Retailer/
wholesaler pay initially, but billed later
Co-operative advertising program : reimburse the
retailer a certain %age of the ad costs . Ad
content/ placement etc mutual.
The retailer earns the incentive only after meeting
the conditions set by the manufacturer.
Eg Intel/ Reebok/ HP etc
 Types of Trade Promotions
• Trade Shows:
Opportunity to discover potential customers
and sell new products
Strengthen current relationships
Find out competition is doing
Meet decision makers directly
For company image / brand name
 Types of Trade Promotions
• Trade Shows:
AMTEX (Asian Machine Tools Exhibitions)
IndiaChem
BuildArch
AAF (All about Food Expo)
India Packaging Show
POP Asia
Package Print Expo
Interiors International India Show
 Types of Trade Promotions
• Categories of buyers :
Education seekers ( Look, browse, learn-not in
buying mode)
Reinforcement seekers (Reassurance for past
decisions)
Solution seekers (specific need, in buying mode)
Buying teams (seeking vendors for business, in
buying mode)
Power buyers (key purchasing agents with authority
to buy)
 Types of Trade Promotions
• Specialty Promotions
Giveaways –Unique , role of intended message
Often distributed in trade shows, via direct
mail campaigns or by salespeople
Coffee Mugs/ Pens/ Calendars/ Key chain etc
 Types of Trade Promotions
• Point-of-purchase advertising
Displays, signs, structures
Aids retail selling, placed at strategic location
Pepsi/Coke/HDFC credit cards etc
Trends : Tracking/ changing / tie-up with
website
Coordinating Media support and
training
• Inform consumers of SP program
• Create awareness, curiosity, interest,
favorable attitudes, responsiveness
• Product trail through SP tied with advtg –
long term use of the brand
 Planning for Consumer Promotions
• Promotion-Prone Consumers :
• Brand Loyal Consumers: boost sales and reinforce
the firm’s image
• Price –Sensitive Consumers
Coordinating Sales promotion & Advertising

1) Budget : PLC
Introductory stage : for trails : sampling, couponing
Growth stage : Advertising to stress brand differences
/ brand recall
Maturity stage : advertising only a reminder, Periodic
need of SP, for consumer loyalty, attract new users,
protect against competition.TP – to maintain shelf
space
Decline Stage : SP less likely
 Coordination of Ad and Promotional
themes
• Promote unique brand attributes or benefits and
reinforce the sales message or campaign theme
• Consumer franchise building efforts for brands
 Coordinating Media support and training
• Inform consumers of SP program
• Create awareness, curiosity, interest, favorable
attitudes, responsiveness
• Product trail through SP tied with advtg – long term
use of the brand