Samples, coupons, premiums, contests, and rebates are examples of consumer sales promotions. Do you like free samples? Most people do. A free sample allows consumers to try a small amount of a product so that hopefully they will purchase it. The strategy encourages trial and builds awareness. You have probably purchased a product that included a small free sample with it - for example, a small amount of conditioner packaged with your shampoo. Have you ever gone to a store that provided free samples of different food items? Although sampling is an expensive strategy, it is usually very effective for food products. People try the product, and the person providing the sample tells them about the product and mentions any special prices for it. In many retail grocery stores, coupons are given to consumers with the samples. Coupons provide an immediate price reduction off an item. The amount of the coupon is later reimbursed to the retailer by the manufacturer. The retailer gets a handling fee for accepting coupons. When the economy is weak, more consumers cut out coupons and look for special bargains such as double coupons and buy-one-get-one-free (BOGO) coupons. They may also buy more store brands. While many consumers cut coupons from the inserts in Sunday newspapers, other consumers find coupons online or on their cell phones. Point-of-purchase displays, including coupon machines placed next to products in stores, encourage consumers to buy a brand or product immediately. When a consumer sees a special display or can get a coupon instantly, manufacturers hope the sales promotion increases sales. Stores may also provide coupons for customers with loyalty cards to encourage them to select particular brands and products. Mobile marketing and the Internet provide consumers in international markets access to coupons and other promotions. In India, the majority of coupons used are digital, while paper coupons have the largest share in the United States. Over 80 percent of diapers are purchased with coupons; imagine how much easier and less wasteful digital coupons scanned from a mobile phone are for both organizations and consumers. Other sales promotions may be conducted online and include incentives such as free items, free shipping, coupons, and sweepstakes. For example, many online merchants such as Shoe Station and Zappos offer free shipping and free return shipping to encourage consumers to shop online. Some firms have found that the response they get to their online sales promotions is better than response they get to traditional sales promotions. Another very popular sales promotion for consumers is a premium. A premium is something you get either for free or for a small shipping and handling charge with your proof of purchase (sales receipt or part of package). Remember wanting your favorite cereal because there was a toy in the box? The toy is an example of a premium. Sometimes you might have to mail in a certain number of proofs of purchase to get a premium. The purpose of a premium is to motivate you to buy a product multiple times. What many people don't realize is that when they pay the shipping and handling charges, they may also be paying for the premium. Contests or sweepstakes also attract a lot of people. Contests are sales promotions people enter or participate in to have a chance to win a prize. The Publisher's Clearing House Sweepstakes and the Monopoly Game at McDonald's are both examples. The organization that conducts the sweepstakes or contest hopes you will not only enter its contest but buy some magazines (or more food) when you do. Loyalty programs are sales promotions designed to get repeat business. Loyalty programs include things such as frequent flier programs, hotel programs, and shopping cards for grocery stores, drugstores, and restaurants. Sometimes point systems are used in conjunction with loyalty programs. After you accumulate so many miles or points, an organization might provide you with a special incentive such as a free flight, free hotel room, or free sandwich. Many loyalty programs, especially hotels and airlines, have partners to give consumers more ways to accumulate and use miles and points. Rebates are popular with both consumers and the manufacturers that provide them. When you get a rebate, you are refunded part (or all) of the purchase price of a product back after completing a form and sending it to the manufacturer with your proof of purchase. The trick is completing the paperwork on time. Although different types of sales promotions work best for different organizations, rebates are very profitable for companies because many consumers forget or wait too long to send in their rebate forms. Consequently, they do not get any money back. Rebates sound great to consumers until they forget to send it back. Page 2
Learn new skills or earn credit towards a degree at your own pace with no deadlines, using free courses from Saylor Academy. We're committed to removing barriers to education and helping you build essential skills to advance your career goals. Start learning here, or check out our full course catalog. Log in or Sign up to enroll in courses, track your progress, gain access to final exams, and get a free certificate of completion! Page 3
Learn new skills or earn credit towards a degree at your own pace, with no deadlines, using free courses from Saylor Academy. We're committed to removing barriers to education and helping you build essential skills to advance your career goals. Choose a course below, or check out our full course catalog. Log in or Sign up to enroll in courses, track your progress, gain access to final exams, and get a free certificate of completion! A coupon is a ticket or document that can be exchanged for a financial discount or rebate when purchasing a product. Show how and why coupons are used as part of sales promotion methods
Coupons were mailed to potential customers and placed in magazines. The company gave soda fountains free syrup to cover the costs of the free drinks. It is estimated that between 1894 and 1913 one in nine Americans had received a free Coca-Cola, altogether totaling 8,500,000 free drinks. Why would a company let consumers walk away paying less for their product than the displayed price? Peer pressure may be one reason. Coupons are an inexpensive form of marketing. Due to this fact, almost half of all retailers say that they use some type of coupon program. If a company's competitors are doing it, the company will most likely consider doing it as well. That's not the only reason, however. Coupon programs offer a host of benefits. They can:
A rebate is an amount paid by way of reduction, return, or refund on what has already been paid or contributed. Examine the rationale behind and the use of rebates as part of sales promotions
The mail-in rebate (MIR) is the most common. Rebates are offered by either the retailer or the manufacturer of the chosen product. Large stores often work in conjunction with manufacturers, usually requiring two or even three separate rebates for each item. Manufacturer rebates are sometimes valid only at a single store. Rebate forms and special receipts are sometimes printed by the cash register at time of purchase on a separate receipt, or available online for download.In some cases, the rebate is available immediately, in which case it is referred to as an instant rebate. Some rebate programs offer several payout options to consumers, including a paper check, a prepaid card that can be spent immediately without a trip to the bank or even PayPal payout. Rebates are heavily used for advertised sales in retail stores in the United States. In the UK, rebates are less common, with manufacturers and retailers preferring to give discounts at the point-of-sale rather than requiring mail-in or coupons. However rebates are sometimes given in the form of "cashback offers" for mobile phone contracts or other high value retail items sold alongside a credit agreement.
Premiums are prizes, gifts, or other special offers consumer receive when purchasing products. Identify the rational, types and use of premiums from a sales promotional and personal selling perspective
The marketing objectives of such premiums are to:
In-or On-package Premiums are usually small gifts, such as toys in cereal boxes.
Store or manufacturer premium are gifts given by either the retail store or the manufacture when the customer purchases a product. The marketing objectives of such premiums are to:
The marketing objectives of this type of premium is to attract more customers with low prices. The benefits to the manufacturer is that they receive additional revenues. Successful premium programs require that marketers:
Loyalty marketing is an approach whereby a company focuses on growing and retaining existing customers through incentives and rewards. Discuss the basis, use and impact of loyalty programs as a personal selling and sales promotion tool
Branding, product marketing and loyalty marketing all form part of the customer proposition – the subjective assessment by the customer of whether to purchase a brand or not, based on the integrated combination of the value they receive from each of these marketing disciplines. The discipline of customer loyalty marketing has been around for many years, its value as an advertising and marketing vehicle have made it omnipresent in consumer marketing organizations since the mid- to late-1990s. Some loyalty marketing industry insiders, such as Fred Reichheld, have claimed a strong link between customer loyalty marketing and customer referral. In recent years, a new marketing discipline called "customer advocacy marketing" has been combined with, or replaced, "customer loyalty marketing. " To the general public, many airline miles programs, hotel frequent guest programs and credit card incentive programs are the most visible customer loyalty marketing programs. Frequent Flyers On May 1, 1981 American Airlines launched the first full-scale loyalty marketing program of the modern era with the AAdvantage frequent flyer program. This revolutionary program was the first to reward "frequent fliers" with reward miles that could be accumulated and later redeemed for free travel. Many airlines and travel providers saw the incredible value in providing customers with an incentive to use a company exclusively and be rewarded for their loyalty. Within a few years, dozens of travel industry companies launched similar programs. Card Linked Offers The early part of 2010 saw the rise of Card Linked Offers (CLOs) as a new loyalty marketing technique for brands, retailers and financial institutions, stemming from a rise in popularity of both mobile payment and coupons. CLOs connect offers or discounts directly to a consumer's credit card or debit card, which can then be redeemed at the point of sale. To receive and use CLOs, consumers must willingly opt in to a CLO program and provide their credit/debit card information. When consumers see relevant CLO-enabled advertisements and product offers while browsing online, using a mobile device, watching TV, reading a newspaper or magazine or listening to the radio they can click, text or scan a QR code to link the CLO-enabled ad directly to their credit/debit card. After consumers make a purchase at the designated retail location, the savings appeared are credited directly to their bank, credit card or PayPal account. As such, CLOs eliminate point-of-sale integration, mail-in rebates and paper coupons. Offers are typically based upon consumer preferences and previous purchase history. Prior to 2010, static CLOs existed for many years in the form of bank-issued loyalty offers, such as points or savings on travel purchases.Consolidated Loyalty Programs Recently there has been a move away from proprietary loyalty schemes to a more consolidated approach, where a single registered account can link a consumer to any number of participating merchants. The principal advantage of this approach is that it minimizes the number of discrete relationships between consumers and merchants and only requires a one-off registration.One prominent example is the US-based Punchd, which became part of Google in 2011. Others, like MazeCard, have offered consolidated loyalty marketing schemes in other continents. Many loyalty programs have changed the way in which consumers interact with the companies that they purchase products or services from and how much the consumers spend. Many consumers in the US and Europe have become quite accustomed to the rewards and incentives they receive by being a "card carrying" member of an airline, hotel or car rental program. In addition, research from Chris X. Moloney shows that nearly half of all credit card users in the US utilize a points-based rewards program.In recent years, the competition for high income customers has led many of these loyalty marketing program providers to provide significant perks that deliver value well beyond reward points or miles. Both American's AAdvantage program and Starwood Hotels' Preferred Guest program have received industry awards, called "Freddie Awards" by Inside Flyer Magazine and its publisher Randy Petersen for providing perks that customers value highly. These perks have become as important to many travelers as their reward miles, according to research. In his book, Loyalty Rules!, Fred Reichheld details the value of customer referral on the growth and financial performance of dozens of leading US firms. Reichheld purports that the measurement of company advocates, or promoters, is the strongest single measurable correlation between customers and corporate performance. Similarly, Chris X. Moloney has presented new findings (Loyalty World London 2006) that showed a magnetic value to a company to promote and measure customer referrals and advocacy via research and marketing. Contests and sweepstakes are two forms of sales promotions which attract consumers by offering them the chance to win a valuable prize. Discuss the characteristics of contests and sweepstakes and how companies benefit from their use
Sponsor promotion
Winner notification
A free sample is a portion of a product given to consumers at no cost for their trial with the aim of driving product adoption. Describe the characteristics and proper methods of sampling
Many consumer product companies now offer free samples through their websites to encourage consumers to regularly use the products and to gather data for mailing lists of potentially interested customers. Food courts, grocery stores, and companies such as Costco and Sams Club routinely give out free samples to customers to persuade them to buy the product. Paint chips are samples of paint colors that are sometimes offered as free samples. The expansion of online marketing with regard to promotional giveaways has facilitated the rise of "Freebie sites" that seek to aggregate all promotional free sample offers in one place. These sites will often compile free product samples from all over the web and categorize them by type. Some product sample offers may require consumers to complete a survey or refer a friend to qualify for the freebies. When all requirements are fulfilled, the product samples are shipped to the consumer. Additionally, the advent of the social graph and the realization that consumers take more and more cues from each other's reviews, has opened up a new branch of sampling called social sampling. Soap manufacturer Benjamin T. Babbitt in the 19th century was one of the first known, though almost certainly not the first ever, people to offer free samples of his products. It is also possible to purchase products in small "trial size" containers. This is common with toiletries such as shampoo, which are useful for vacations or other travel, where large bottles or other containers would be impractical (or more recently, not permitted for air travel). These are also often provided in hotel and motel rooms for the guests. Samples may also be loaned to the customer if they are too valuable to be given for free, such as samples of a countertop or of carpet to be used for remodeling, or tasting samples as in the Scream Sorbet stand at a farmers market. Sampling has been around for ages. So it obviously works. But like other promotional programs, bad implementation will lead to bad results. Here are some tips marketers use to create successful sampling programs:
Point-of-sale displays are sales promotions that are placed where they can easily draw customer attention and trigger impulse buying. Illustrate the rationale and use of point of purchase promotions
Point of purchase promotions offer marketers one of the most effective sales promotion tools included in the "promotional mix." Point-of-sale displays (POS) are a specialized form of sales promotion found near, on, or next to a checkout counter (the "point of sale"). They are intended to draw the customers' attention to products. These may be new products, a special offer, or may promote special events, such seasonal or holiday-time sales. POS displays can include:
Online sales promotion can create personal relationships, channels of communication, and an exchange of information regarding a product. Discuss on line sales promotion as a sales promotion method and relative to personal selling and sales promotion
Online sales promotions are meant to turn site visitors into consumers. The objective is to get the visitor to take action by contacting a sales representative and ultimately buying the offered product. The methods to accomplish this goal are diverse and include:
|