Consumer Promotions

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management study


<p>Consumer Promotions</p> <p>Consumer promotions are incentives aimed at a firms customers who may be end users of goods or services. These are directed at individuals or firms that use the product and do not sell it to another business. These are used in B2C and B2B markets. Primary goal of consumer promotion is to make the customer enact the final act; purchase the product/service.</p> <p>Two General Categories of PromotionsConsumer promotions programs are effective in bringing traffic into a store and generate brand loyalty. 1. Consumer franchise building promotion designed to increase awareness of and loyalty to a brand.</p> <p>The goal is to build favorable image by pointing out unique features and selling points , with the focus on reduced reliance on incentives and discounts.</p> <p>a</p> <p>2. Sales building promotions focus on immediate sales, rather than brand equity or loyalty, through discounts, prizes, or other enticements.</p> <p>Coupons</p> <p>A price reduction offer to consumer it may be a percentage of the retail price or Rs.10 off an absolute amount. Most of coupons are issued by manufacturers and most of them are offered through print media. Coupons are also issued through free standing inserts (FSIs) issued along with newspapers, primarily on Sundays, etc.</p> <p>Types of Coupons Instant redemption coupons distributed in retail stores Bounce-back-coupons- placed inside packages so that consumers Bounce-back-couponscan not use them immediately Cross-ruffing placement of a coupon for one product on Crossanother product. Cross-ruff coupons should be on products that Crossfit together and those are purchased and consumed simultaneously. Response offer coupons are issued following requests by consumers. Coupons are then mailed, faxed, or sent by Internet to the consumer Another form of coupon is electronically delivered</p> <p>Problems with couponsReduced revenues MassMass-cutting coupons are redeemed through nonnonexistent retail outlets Counterfeiting Misredemptions using coupons for larger quantities such as for 200 Grams rather than for 500 Grams of coffee powder</p> <p>Tactics to improve coupon effectiveness A higher face value makes the coupon attractive Better distribution method for coupons free standing inserts (FSIs) are attractive to consumers as they are received in the privacy of homes and can be decided upon. In-store Incoupons are less attractive as the shoppers need to process information while in the store Third attractiveness is whether the coupon is for a preferred brand or a brand that has good recall</p> <p>PremiumsPremiums are prizes, gifts, or other special offers consumers receive when purchasing goods or services. During premium promotions consumers pay full prices unlike in the case of coupons through price reductions. The key is to pick the right type of premiums.</p> <p>Different forms of premiums1. Free-in-theFree-in-the-mail when customer mail in a proof of purchase to the manufacturer who sends a gift to the buyer credit card companies use premiums to entice individuals to sign up for credits the gift may be in the form of cash back on purchases and frequent flier miles. In- or on-package premiums are usually small gifts in In- onthe form of toys in cereal boxes or baby food</p> <p>2.</p> <p>3.</p> <p>4.</p> <p>Store or manufacturer premiums gifts given by manufacturer or retail outlets when the customer purchases a product A Maruti 800 given away as gift by a construction company to a customer when buying Rs. 15 Lakhs worth apartment SelfSelf-liquidating premium these require customers to pay a sum of money for a gift or item. Example: Two rolls of Kodak Film may be offered for Rs. 175 plus shipping and handling and a proof of purchase of a Kodak camera costing Rs. 3000. The premium is called self-liquidating because Rs. 175 meets the cost selfof the premium.</p> <p>Problems with Premiums (1) The time factor and (2)the cost Premiums tend to have short life spans. Companies may select items that are in demand and of current fashion. But by the time these things arrive at the stores, the items might have lost appeal or attraction to the customers. A premium exclusively offered may raise the demand for the product. A tie-in offered exclusively through a tieparticular outlet like a restaurant or supermarket chain may have to be ultimately offered through other outlets. This would raise the price of the item and cost to the firm.</p> <p>Building Successful Premium Programs Match the premium to the target audience Carefully select the premiums (avoid fads, try for exclusivity) Pick a premium that reinforces the firms product and image Integrate the premium with other IMC tools (especially advertising and POP displays) Dont expect premiums to increase short-term profits shortAlthough premiums may provide value and enhance brand, they may not increase profits.</p> <p>Contests and SweepstakesContest and Sweepstakes are used both in consumer and business markets. The primary success depends upon the appeal and desirability of the prize list. A prize that is perceived to be of low or no value may not work. Words, contests and sweepstakes are often seen interchangeably used; but differ primarily on legal terms.</p> <p> Contests require the participants to perform some activity; winner is decided on who performs best or comes first, etc. Sometimes it may be found illegal to force a contestant to purchase an item. No purchase is required to enter a sweepstakes. Consumers may enter as many times as they wish. The chances of winning a sweepstakes are based on a probability factor.</p> <p>Problems with Contests and Sweepstakes Costs Consumer indifference Clutter</p> <p>Refunds and RebatesRefunds and rebates are cash returns offered to consumers and businesses after purchases. A refund is a cash return on soft goods like food or clothing. Rebates are given on sale of hard goods like appliances and automobiles. Normally refunds are smaller and rebates larger. Rebates are common in the computer and electronics industries. Computer retailers tend to reduce advertising costs by resorting to more and more rebates.</p> <p>The problems associated with refunds and rebates include costs, the paperwork, and diminished effectiveness. The retail outlet must carefully document manufacturer rebates. To hold down paperwork, manufacturers may assign to dealers the responsibility of giving rebates by deducting them from the sales price. Many rebate programs suffer from diminished effectiveness as consumers have over a period of time come to expect them. For example, many car dealers note that customers may not buy cars unless rebates are offered.</p> <p>To generate an effective refund-rebate refundprograms, the offer must have:Visibility Perceived newness An impact</p> <p>Sampling Sampling is to encourage consumers to try a new product or improved product. It is the actual delivery of a product to consumers for their use or consumption. Most samples are provided free of cost. A coupon or price-off incentive is often given along pricewith the free sample to encourage the consumer to buy a full-size pack. full-</p> <p>Various sampling methods In-store distribution In Direct sampling (mailing directly to consumers) Response sampling (sending the samples against requests from consumers in response to offers contained in ads. On TV, Internet, Print) .</p> <p> Cross-ruff sampling (sample of one product Crosswith another product) Media sampling (sample of a toilet soap or perfume included in a magazine ad.) Professional sampling (doctors providing free medicines to patients) Selective sampling ( offered at particular places like hospitals, trade fairs, etc)</p> <p>Bonus Packs When an additional or extra number of items are placed in a special product package, its is called a bonus pack. If Kellogg increases the size of the pack by 25%, consumer may eat more cereal; but if the size of the Colgate container is increased by 25%, the consumer may not use the paste more than in the ordinary case. But firms do offer such bonus packs to preempt the competition. .</p> <p> Bonus packs rarely attract new customers if the consumer had not previously purchased the brand. Bonus packs can lead to brand switching if the consumer has used the brand previously. Facing purchase decisions, consumers may opt for brands that offer bonus packs at the regular price.</p> <p>Advantage of Bonus PacksIncrease use of the product Match or preempt competitive actions Stockpile the product Develop customer loyalty Attract new users Encourage brand switching</p> <p>PricePrice-offsA price-off is a temporary reduction in pricereduction in the price of a product to the to the consumer. Price-offs are Priceexcellent at stimulating sales of an existing product. They can entice customers to try new products as lower prices may reduce the financial risk of making the purchase.</p> <p>.</p> <p>They can encourage customers to switch brands in brand parity situations or when no strong brand loyalty exists. .</p> <p>Retail Price-offs Price The retailer can initiate a price-off promotion pricefor drawing traffic into the store. The idea is for customers to purchase additional items other than those on sale. During holidays and other seasons of the year, price-offs sales are very pricecommon. Retailers advertise major price-off pricesales at above occasions.</p>