m

1. 11-1
Chapter Overview
• Types of consumer
promotions
• Planning for consumer
promotions
• Business-to-business
promotions
• International consumer
promotions
11
Consumer Promotions
Prof. (Dr.) Kao Kveng Hong,
PhD, D.Litt

2. 11-2
Coupons
 How often do you use
coupons?
 What products do you tend to
use coupons to purchase?
 Will a coupon affect which
brand you buy?
 Why do you think companies
offer so many coupons to
consumers?
Discussion Slide
11

3. 11-3
• Coupons
• Premiums
• Contests and sweepstakes
• Refunds and rebates
• Sampling
• Bonus packs
• Price-offs
F I G U R E 1 1 . 1
Types of Consumer Promotions

4. 11-4
A coupon accompanies this informational Gold Bond advertisement

5. 11-5
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).

6. 11-6
Percentage of Sales with a Coupon
• Disposable diapers 17.1%
• Detergents 15.0%
• Meal starters 14.2%
• Dough products (refrigerated) 13.6%
• 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

7. 11-7
• Print media (88%)
• FSI (80%)
• Direct mail (4%)
• On, in or near package (3%)
• Cross-ruff
• Other methods (5%)
• In-store
• Sampling
• Scanner-delivered
• Response offer
• Internet
• Fax
• Sales staff
F I G U R E 1 1 . 2
Methods of Distributing Coupons

8. 11-8
Types of Coupons
• Instant
redemption
• Scanner-
delivered
• Cross-ruffing
• Response offer
• U-pons

9. 11-9
Coupon Redemption Rates
• Instant redeemable 39.3%
• Bounce-back 17.2%
• Instant redeemable – cross ruff 17.1%
• Electronic shelf 10.2%
• Electronic checkout 7.8%
• In-pack 5.8%
• On-pack 4.7%
• Direct mail 3.5%
• Handout 3.1%
• Free standing inserts 1.3%
Type of coupon Avg. Redemption Rate
Source: Santella & Associates

10. 11-10
Problems with Coupons
• Reduced revenues
• Mass cutting
• Counterfeiting
• Misredemption
• Dependency

11. 11-11
Factors Affecting Coupon
Effectiveness
• Face value of coupon.
• Distribution method.
• Coupon for preferred brand or brand in
evoked set.

12. 11-12
INTEGRATED LEARNING EXPERIENCESTOP
Coupons.com, Inc.
Http://www.coupons.com/Advertising.asp
Coupon Country/Kaufman Advertising
Http://www.couponcountry.com
Coupon Distribution and Marketing Services

13. 11-13
Types of Premiums
• Free-in-the-mail
• In- or on-package
• Store or manufacturer
• Self-liquidating

14. 11-14
Fisher Boy
Free, in-the-mail premium

15. 11-15
Fast-food chains are
well known for their in-
store premiums.

16. 11-16
• Match the premium to the target market.
• Carefully select the premiums.
(Avoid fads, try for exclusivity)
• Pick a premium that reinforces the firm’s
product and image.
• Integrate the premium with other IMC tools.
(Especially advertising and POP displays)
• Don’t use premiums to increase 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 1 . 3
Keys to Successful Premiums

17. 11-17
Creating Successful Contests and
Sweepstakes
• Know the legal restrictions.
• Do we want losers?
• Must overcome clutter.
• Find the right combination of prizes.
• Look for tie-in opportunities with special
events or other companies.
• Must be coordinated with POP Displays
and other marketing tools.

18. 11-18
INTEGRATED LEARNING EXPERIENCESTOP
• Sweepstakes Builder
• Http://www.sweepstakesbuil
der.com
• Promotions Activators, Inc.
• Http://www.promotionactivat
ors.com
• ADPAC Corporation
• Http://www.adpaccorp.com
• How can these firms assist
in the development of a
contest or sweepstake?
• What other promotional
services can they provide?
• What are the advantages
and disadvantages of
using one firm for multiple
or all of the consumer
promotions?

19. 11-19
Successful Rebate/Refund
Programs
• Visibility is necessary
• Encourages customers to act
• Should not be too complicated
• Avoid becoming a permanent
component of the purchase decision
(automobile rebates)
• Should be easy and profitable for
retailers

20. 11-20
• In-store distribution
• Direct sampling
• Response sampling
• Cross-ruff sampling
• Media sampling
• Professional sampling
• Selective sampling
F I G U R E 1 1 . 4
Types of Sampling

21. 11-21
Experiment
Impact of In-Store Sampling
• Meat product A 100% 430% 110%
• Meat product B 100% 590% 123%
• Meat product C 100% 185% 100%
• Bread product 100% 170% 90%
• Biscuit product A 100% 359% 64%
• Biscuit product B 100% 201% 49%
Product Previous 4 weeks Sampling Week Following 4 weeks
Source: Michelle Lawson, Dalton McGuinness and Don Esslemont, “The Effect of In-Store
Sampling on the Sale of Food Products,” Marketing Bulletin, 1990, Vol. 1, pp 1-6.

22. 11-22
Experiment
Impact of In-Store Sampling on Competitors
• Bread product 100% 170% 90%
• Competitor A 100% 106% 105%
• Competitor B 100% 79% 93%
• Competitor C 100% 78% 86%
Product Previous 4 week Sampling week Following 4 weeks
Source: Michelle Lawson, Dalton McGuinness and Don Esslemont, “The Effect of In-
Store Sampling on the Sale of Food Products,” Marketing Bulletin, 1990, Vol. 1, pp 1-
6.

23. 11-23
Sampling
• How effective would
sampling be for the
goods and services listed
on the right?
• How would you design a
sampling program that
would be effective, yet
not too costly?
• What type of consumers
would you target for the
sampling?
• Fitness center
• Ice cream
• Dental service
• Clothing manufacturer
• Auto repair service
• Office supply store
• B-to-B consulting service
• B-to-B supplier of raw
materials such as sugar,
flour, etc. to bakeries.
Discussion Slide

24. 11-24
• Increase usage of the
product
• Match or pre-empt
competitive actions
• Stockpiling of product
• Develop customer loyalty
• Attract new users
• Encourage brand
switching
F I G U R E 1 1 . 5
Reasons for Using Bonus Packs

25. 11-25
Price-Offs
• Temporary reduction in
price.
• Excellent for boosting
short-term sales.
• Excellent for generating
customer traffic.
• Can be implemented
easily.
• Must be careful not to
increase customer price
sensitivity.
• Can have detrimental
impact on brand and
corporate image.

26. 11-26
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 price
9%
Consumer would have purchased item anyway
40%

27. 11-27
Promotion Combinations
• Over-lay
• Intra-company tie-in
• Inter-company tie-in

28. 11-28
Types of Consumers
• Promotion prone consumers
• Brand loyal consumers
• Price sensitive consumers

29. 11-29
INTEGRATED LEARNING EXPERIENCESTOP
• What type of sales
promotions are offered?
• What do you think are
the objectives of the
consumer promotions?
• Are the promotions
offered on the Web site
consistent with their
advertising and
promotions offered at
retail outlets?
Consumer Promotions on the Internet
Quaker State
Http://www.quakerstate.com
Taco Bell
Http://www.tacobell.com
Kraft Foods
Http://www.kraft.com
Jockey
Http://www.jockey.com
Avon
Http://www.avon.com
Lee Jeans
Http://www.leejeans.com

30. 11-30
Business-to-Business
Consumer Promotions
• 18.7% of B-to-B marketing budgets spent on
sales promotions.
• Coupons
• Premiums
• Sweepstakes and contests
• Sampling
• Bonus packs

31. 11-31
International Consumer Promotions
• Difficult to centralize consumer promotion
programs.
• Laws vary across countries.
• Difference in distribution rates
• Requires an experienced international sales
promotion coordinator.

32. 11-32
Redemption Rates Distribution Methods
Media
Redemption Rate Distribution Method
England Italy Spain U.S. England Italy Spain U.S.
Newspaper 1.9% ----- 1.4% 0.8.% 26% ----- 10.0% 1.9%
Magazine 2.8% 1.4% 1.4% 0.3% 13% 5.7% 14.7% 4.2%
Door to door 11.0% 13.7% 12.9% ----- 18% 2.0% 43.0% -----
In/on pack 25.1% 20.3% 30.7% 9.2% 15% 63.2% 25.2% 2.5%
In store 27.7% 32.3% 28.2% 6.8% 19% 22.1% 5.5% 1.9%
FSI 12.0% ----- ----- 1.4% 1% ----- ----- 85.4%
Mailing ----- 6.6% ----- 3.6% ----- 6.5% ----- 1.1%
Overall average 6.8% 14.3% 16.0% 2.0%
Sources: "International Coupon Trends," Direct Marketing, Volume 56, Issue 4 (August 1993),
pp. 47-49; "FSI Coupon Redemption Rate for Frozen Foods," Frozen Food Age, Volume 47,
Issue 3 (October 1998), p. 70.

33. 11-33
• Choose the best promotions for your
product and desired product image.
• Ensure there is a synergy between the
advertising plan, trade promotions and
consumer promotions.
• Select an agency to design and handle
the consumer promotion program.
Building Your IMC Campaign