14.7: Promotion Methods in Consumer Sales

14.7.1: Coupons

Learning Objective

Show how and why coupons are used as part of sales promotion methods

Key Points

• Coupons gain popularity during tough economic times.
• Coupons are an inexpensive form of marketing.
• Coupons offer marketers both advantages and disadvantages.
• An effective coupon program can be measured and entices consumers to use the coupons.

Key Terms

up-sell

Upselling (sometimes “up-selling”) is a sales technique whereby a seller induces the customer to purchase more expensive items, upgrades, or other add-ons in an attempt to make a more profitable sale.

brand awareness

Brand awareness is the extent to which a brand is recognized by potential customers and is correctly associated with a particular product.

discount store

a type of department store which sells products at prices lower than those asked by traditional retail outlets

Example

• The key to Coca-Cola’s growth was ingenious marketing, which included having the company’s employees and sales representatives distribute complimentary coupons for Coca-Cola.

Introduction

Coupons are hot and the state of the economy has much to do with their popularity. Article after article about saving money mentions using coupons. And consumers are following their advice.

You don’t have to look any further than the Promotion Marketing Association (PMA) Education Foundation, Inc. for proof that coupons work for consumers. Their figures show that in the first half of 2011, consumers saved a whopping $2 billion though the use of coupons.

The NCH Vice President of Marketing backs up this figure. According to him, coupon redemption volume continued to show a marked increase in the first half of 2011.

Why Consumers Love Coupons: It’s in the Definition

A coupon is a ticket or document that can be exchanged for a financial discount or rebate when purchasing a product. Coupons offer instantly redeemable savings on certain products. That means that consumers get an instant reduction on the price at the point of purchase. They don’t have to send anything to the manufacturer, they don’t have to enter any type of contest. They walk away from the store with the satisfaction that they have saved money.

Origins of Coupons

In 1887, the Coca-Cola Company was incorporated in Atlanta with Asa Candler as one of the partners. He transformed Coca-Cola from an insignificant tonic into a profitable business by using innovative advertising techniques. The key to this growth was Candler’s ingenious marketing, which included having sales representatives distribute complimentary coupons for Coca-Cola.

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.

Marketers’ Love / Hate Relationship with Coupons

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:

• Increase the number of new customers – A customer may try a product just because they have a coupon for it and like it enough to continue to buy it.
• Help move a specific product
• Build brand awareness – A consumer sees the brand name on the coupon even when the coupon is not redeemed.
• Reward current customers – Customers are delighted when they receive the gift of savings from the manufacturer of a product that they buy regularly.
• Entice former customers to return
• Create the opportunity for the marketer to up-sell a more profitable product
• Provide the marketer with a highly measurable marketing program

The idea behind a coupon program isn’t simply to get consumers to buy your product. You want them to notice your brand. Well-designed coupon programs accomplish that goal. In addition, retailers will benefit from such programs as it will drive traffic to their store.

Coupons, though, can have both advantages and disadvantages. The optimal scenario for marketers is that coupons create brand awareness without consumers using the coupon. In fact most coupons are never redeemed. This makes marketers happy as there is no reduction in revenue. A reduction of revenue, however, is just one of the disadvantages of a coupon program. Others include:

• Mass-cutting
• Counterfeiting
• Misredemptions.

How Coupons are Distributed

You probably run across coupons on a daily basis. Open your mailbox and you’ll see direct mail containing coupons. Look on the Internet and you’ll see coupons that can be distributed electronically. A product that you buy may actually have a coupon on the package or you might go shopping and be happily surprised to find a pad on the shelf containing product coupons.Creating Effective CouponsEven though marketers may be happy to not have coupons redeemed, that is not the objective of issuing coupons. You do want to lure consumers to redeem the coupon. That’s how you get noticed in the sea of other offers.To accomplish that goal coupons must be created with clear, precise text that shows the:

• Face value
• Product image
• Bar code (if needed)
• Legal copy
• Expiration date
• Company name and address.

Measuring Effectiveness of Coupon Programs

You will not be able to judge the effectiveness of your coupon campaign without testing and measuring it. Tracking codes let retailers know not only who redeemed the coupons, but also where the coupons were found. This data can help you decide which coupon is best for your target audience.

14.7.2: Rebates

Learning Objective

Examine the rationale behind and the use of rebates as part of sales promotions

Key Points

• The mail-in rebate (MIR) is the most common type of rebate.
• In some cases, the rebate may be available immediately, in which case it is referred to as an instant rebate.
• New companies that want to break into a market can offer substantial rebate savings on their new product as a means of capturing a customer’s attention.
• Even though rebates provide savings to customers, getting their money back requires a lot of work and may not be worth it to some.

Key Term

mail-in rebate

A MIR entitles the buyer to mail in a coupon, a receipt and barcode in order to receive a check for a particular amount, depending on the particular product, time, and often, place of purchase.

Example

• Personal computer components and electronics seem to have a large portion of rebate sales. For example, an item might be advertised as “$39 on rebate” or “$79 OTD (out-the-door), with a $40 rebate that the customer would need to redeem. The turnaround time is generally four to eight weeks, though some rebates may take eight to twelve weeks.

Introduction

A rebate is an amount paid, by way of reduction, return, or refund on what has already been paid or contributed. It one of the sales incentives promotion marketers use to supplement product sales.

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.

Rationale Behind Rebates

• Rebates are arguably more effective selling tools than sales or instant discounts because with rebates consumers pay the full price for the product up front and associate the higher price product as one of greater quality.
• Rebates are more flexible and can be turned off and on more easily than a sale or instant discount which tends to lower the perceived value of a promoted product.
• The information given in the rebate form, such as name, address, method of payment, can be used for data mining studies of consumer behavior.
• The information can be used as evidence of a pre-existing business relationship for marketing purposes, such as ‘do not call’ lists.
• Rebates offer retailers the benefit of giving customers a temporary discount on an item, to stimulate sales, while allowing it to maintain its current price point.
• Rebates allow companies to “price protect” certain product lines by being selective in which models or brands to be discounted.
• During the turnaround time, the company can earn interest on the money.
• If the turnaround time crosses into the next fiscal year or quarter, a rebate offer can inflate sales in the current period, and not have to be accounted for until the next period and then it could be attributed as a cost reducing sales or expense for the next period.
• Not all buyers will meet the criteria to receive the rebate. Companies often require the original UPC barcode, receipt, and additional information, which a buyer may forget to include when redeeming the rebate. Companies almost always add other caveats to the rebate as well, such as the redemption having to be postmarked by a certain date. It works in the company’s favor if buyers do not act quickly to redeem.
• New companies that want to break into a market can offer substantial rebate savings on their new product as a means of capturing a customer’s attention. Zeus Kerravala, vice president at the Yankee Group, has said “For companies that haven’t been in a particular market, the rebate that essentially refunds the customer’s money is a great way to get people to pay attention to them. This is especially true in consumer electronics, where brand name does matter. It’s a good way to get customers to take a chance on a new brand. “

Benefits and Costs for Consumers

Rebates may seem to offer customers lower pricing. Deal hunter sites frequently tout the benefits of rebates in making technology affordable. According to 2011 research, 47% of consumers submitted a rebate within the past 12 months; whereas similar research conducted in 2009 showed that only 37% of consumers had submitted a rebate in the preceding year. Still, rebates take a certain amount of time and effort from the consumer – figuring out the rules, filling out the forms, preparing and dropping off the mailing, cashing in the check, keeping track of the paperwork while this is being done. Thus, a rebate can be thought of as being paid to do this paperwork and provide one’s personal data to the company. Chances of rebate mailing being lost or failing some criteria may further reduce the expected return on this effort. Consumers who are aware of this, and who value their time, effort and opportunity costs above the value of the rebate, may choose to ignore a non-instant rebate that requires such procedures and assume the out-the-door price when considering the purchase. On the other hand, if the consumer does not mind these obstacles and is more concerned with the price than their time for any reason, the rebate may be seen as a deal.

14.7.3: Premiums

Learning Objective

Identify the rational, types and use of premiums from a sales promotional and personal selling perspective

Key Points

• Premiums fall into one of two categories: free premiums which only require the purchase of the product and self-liquidating premiums which require consumers to pay all, or some, of the price of the premium.
• Premiums can actually enhance an image and were, in fact, the basis of of the first loyalty marketing programs.
• To insure a successful program, match the premium to a target market by selecting one that reinforces the firm’s product and image. Integrate the premium with other marketing tools such as advertising and POP displays.

Key Terms

In-or On-package Premiums

usually small gifts, such as toys in cereal or candy boxes

Self Liquidating Premiums

require the consumer to pay a designated amount of money for the gift or item.

Free Premiums

a sales promotion that only requires buying the product to receive the free gift or reward.

Example

• The Better Crocker Promotional ExampleIn 1929, Betty Crocker began a series of sales promotions that blended premiums, coupons and a loyalty program; it issued redeemable coupons that could be traded for free flatware and other household wares. In 1937, the coupons were printed on the outside of packages, and later the Betty Crocker points program produced a popular reward catalog from which customers could pick rewards using their points. In 2006, it was announced that the Betty Crocker Catalog was going out of business and that all points needed to be redeemed by December 15, 2006. With it, one of the earliest loyalty programs ended a 77 year tradition.

Introduction

Another form of consumer sales promotion is the premium. Premiums are prizes, gifts, or other special offers received when a consumer purchases a product. When a company presents a premium, the consumer pays full price for the good or service, as opposed to coupons that grant price reductions or to samples, instead of receiving the actually product.

One of the first loyalty marketing programs ever offered was a premium in which proof of purchase was redeemed for prizes or gifts. Some marketing experts believe that coupon over-use damages a brand’s image, while premiums can actually enhance it. The key is to match the right type of premium with the product and a predisposed buyer.

Though not as successful as coupons, premiums can be used to boost sales and remain a valuable consumer promotional tool. In the United States, each year over $4.5 billion is spent on premiums.

Type of Premiums

Premiums fall into one of two categories: free premiums which only require the purchase of the product and self-liquidating premiums which require consumers to pay all, or some, of the price of the premium.

Free Premiums

Free-in-the-mail premiums are gift that individuals receive for purchasing products.

The marketing objectives of such premiums are to:

• Promote multiple brand(s) purchases;
• Increase brand recognition and customer awareness;
• Encourage new or additional brand use;
• Make brands more user-friendly; and
• Reward loyal consumers.

The benefits of Free-In-The-Mail Premiums are that:

• They add value and are brand related;
• There is no need for elaborate packaging; and
• They allow larger premiums to be offered.

In-or On-package Premiums

are usually small gifts, such as toys in cereal boxes.

The marketing objectives of such premiums are to:

• Increase brand visibility and customer awareness;
• Revitalize a mature brand;
• Promote multiple purchases through continuity premiums;
• Encourage new or additional uses for a brand; and
• Reward customer loyalty.

The benefits of In- or On-Package Premiums are that they:

• Impact at point-of-sale due to their visibility;
• Offer immediate consumer gratification;
• Have no redemption or couponing cost;
• Provide added value.

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:

• Increase brand visibility and customer awareness; and
• Encourage consumers to try a brand.

Marketers benefits from store or manufacture premiums as they add value to their brand.

Self Liquidating Premiums

Self liquidating premiums require the consumer to pay an amount of money for a gift or item.

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.

Keys to Successful Premium Programs

Successful premium programs require that marketers:

• Match the premium to the targeted market;
• Carefully select the premium ( avoid fads, try for exclusivity);
• Pick a premium that reinforces the company’s product and image;
• Integrate the premium with other IMC tools ( especially advertising and POP displays); and
• Don’t expect premium to increase short-term profits.

14.7.4: Loyalty Marketing

Learning Objective

Discuss the basis, use and impact of loyalty programs as a personal selling and sales promotion tool

Key Points

• 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”.
• 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.
• 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.

Key Terms

Card Linked Offers

Card Linked Offers connect offers or discounts directly to a consumer’s credit card or debit card, which can then be redeemed at the point of sale.

customer advocacy

Customer advocacy is a specialized form of customer service in which companies focus on what is best for the customer. It is a change in a company’s culture that is supported by customer-focused customer service and marketing techniques.

Example

• 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.

Introduction

Loyalty marketing is an approach to marketing, based on strategic management, in which a company focuses on growing and retaining existing customers through incentives.

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.

Modern Consumer Rewards 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.

Loyalty Marketing Impact

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.

14.7.5: Contests and Sweepstakes

Learning Objective

Discuss the characteristics of contests and sweepstakes and how companies benefit from their use

Key Points

• Contests normally require the participant to perform some type of activity and the winner is selected based on who performs the best or provides the most correct answers.
• Sweepstakes entice consumers to submit free entries into drawings of chance (not skill) that are tied to the product or service wherein the featured prizes are given away by sponsoring companies.
• Sweepstakes and contests both allow marketers to interact with and gain a better understanding of their target audience and leave customers with a positive image of the company and its products.

Key Terms

buzz

Major topic of conversation, widespread rumor, or information spread behind the scenes.

sponsor

One that pays all or part of the cost of an event, a publication, or a media program, usually in exchange for advertising time.

Example

• When fashion blogger Scott Schuman, The Sartorialist, kicked off the signing of his book called The Sartorialist: Closer, he ran a contest. To enter, one had to write a story inspired buy three photographs. The winner got to go to the book signing party, stay in a hotel room in New York City, and receive a choice of a bag from Coach.

Introduction

Consumers tend to like sales promotions because they get something for “free. ” If you as a marketer really want to get their attention, however, give a select few of them the chance to receive something with a high value.

Marketers who want to use this type of sales promotion have two options to choose from:

• Contests
• Sweepstakes

Contests

Contests normally require the participant to perform some type of activity. The winner is selected based on who performs the best or provides the most correct answers. No purchase is required to enter a contest and a panel of judges determines the winner. Consumers can enter as many times as they wish, although it is permissible for firms to restrict customers to one entry per visit to the store.

Sweepstakes

There is another consumer sales promotion known as a sweepstake (also known by its inflected forms which are both single and plural: sweepstakes and sweeps). These have become associated with marketing promotions targeted toward both generating enthusiasm and providing incentive reactions among customers. A sweepstake entices consumers to submit free entries into drawings of chance (and not skill) that are tied to product or service awareness wherein the featured prizes are given away by sponsoring companies.

Prizes can vary in value from less than one dollar to more than one million U.S. dollars and can be in the form of cash, cars, homes, electronics, and so on. In Australia, New Zealand and the United Kingdom, a sweepstake is known as a competition.

Sweepstakes frequently have eligibility limited by international, national, state, local, or other geographical factors.

Sweepstakes are often referred to by marketing promoters as second-chance sweepstakes when utilized in conjunction with the awarding of unclaimed prizes during instant-win promotions.

General Structure of Winning a Sweepstakes Prize

Almost every sweepstakes in the United States offering prizes valued at 600 dollars or greater will typically follow the following structure:

Sponsor

promotion

• Creating the sweepstakes promotion for a sponsor or sponsors;
• Advertising the sweepstakes, prize structure, and the official rules;
• Opening date for receiving entries;
• Closing date for receiving entries;
• Drawing date to judge winning entries.

Winner notification

• Sweepstakes promotion judges contacting the prize winner;
• Winner filing publicity release with sponsor’s sweepstakes promotion agency;
• Winner filing affidavit of eligibility (compliance with official rules) with sponsor’s sweepstakes promotion agency;
• Winner filling any required federal or state tax forms with sponsor’s sweepstakes promotion agency;
• Winner receives prize.

By law, the sponsors of sweepstakes must not require the prize winners to pay any shipping or handing charges in order to win or receive their prizes.

Sweepers frequently send out SASE (self addressed, stamped envelopes) to receive free game pieces, official entry forms, and copies of the official rules that are unique and pertain to individual sweepstakes promotions.

How Marketers Value from Contests and Sweepstakes

Marketers have a lot to gain from giving away valuable prizes to consumers. Contests and sweepstakes allow them to:

• Create a buzz about the product — With the rise of social media, word-of-mouth marketing can help make or break a product. Exciting events, such as contests and sweepstakes, encourage people to talk about the company and its products. It is a great, cost-effective way to extend your advertising reach.
• Draw traffic to their website or store — Some consumers may never have heard of your company before. So contests and sweepstakes offer these companies an opportunity to build brand awareness with such consumers.
• Build an e-mail list — Marketers usually give contestants a newsletter or mailing list opt-in option when they enter the contest or sweepstake. New names mean new potential customers in the long-run.
• Perform marketing research — Marketers can easily add a survey to a contest or sweepstakes entry form. The information gathered is just as valuable to them as the prize is to the consumer because it can help marketers better understand their target audience. This better understanding can lead to better marketing campaigns.
• Strengthen their relationship with their customers — People buy from people they like. Contests and sweepstakes allow consumers to interact with the company in a fun way and creates a positive image of the company and its products.

14.7.6: Sampling

Learning Objective

Describe the characteristics and proper methods of sampling

Key Points

• The purpose of a free sample is to acquaint the consumer with a new product.
• Small “trial size” containers of products are also classified as samples.
• Samples may also be loaned to the customer if they are too valuable to be given for free.

Key Term

social graph

The social graph is a term used for sociograms in the Internet context. A sociogram is a graph that depicts personal relations. It has been referred to as “the global mapping of everybody and how they’re related. “

Example

• Paint chips are samples of paint colors that are sometimes offered as free samples.

Introduction

In 2000, best-selling author Seth Godin released a book entitled “The Idea Virus” and then proceeded to give it away for free. Was Seth, who has sold tons of books, suffering from temporary insanity? No, quite the contrary. You see, Seth knew that if he gave the book away for free, people would read it, and if they liked it they would help create a buzz about the book.That’s exactly what happened. In less than a month, 400,000 copies were downloaded for free and even though the downloads were free, people bought the hardcover. The book ended up being #5 on Amazon.com’s best seller list. The promotion strategy Seth Godin used is called sampling and when done correctly it can be one of the most effective ways to market your product.

What is Sampling?

A free sample or “freebie” is a portion of food or other product (for example, beauty products) given to consumers in shopping malls, supermarkets, retail stores, or other venues. Sometimes samples of non-perishable items are included in direct marketing mailings.

The purpose of a free sample is to acquaint the consumer with a new product. It is similar to the concept of a test drive, in that a customer is able to try out a product before purchasing it.

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.

History

Soap manufacturer Benjamin T. Babbitt in the 19^th century was one of the first known, though almost certainly not the first ever, people to offer free samples of his products.

Other Samples

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.

How to Create an Effective Sampling Program

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:

• Find ways to drive new users to your company: Simply giving samples to people who already love your brand or your product is like preaching to the choir. They’ve already got the message.
• Get permission: You may think that you would never turn down something that is free. But how many free samples of perfume or cologne do you have stuffed in the back of your bathroom cabinet? Taking a sample doesn’t turn people into customers unless you have asked permission to give them the sample.
• Encourage trial: To do this, you need to give your samples as close to the point of need as possible. People who are your target audience, but in the wrong setting, will not pay any attention to your samples.
• Start a conversation: Be like Seth Godwin who gave away free copies of his book “The Idea Virus. ” Create a buzz.
• Measure your results: Sampling results might not be as easy to measure as other promotional strategies, but they can be measured. It would be mistake not to do so. Seth Godin saw the results of his sampling program not in the number of downloads, but in the number of people who bought the hardcover version of his book.

14.7.7: Point-of-Purchase Promotions

Learning Objective

Illustrate the rationale and use of point of purchase promotions

Key Points

• In smaller retail outlets, POS displays are supplied by the manufacturer of the products, and are sited, restocked, and maintained by one of their regular salespersons, but this is less common is larger supermarkets.
• Point-of-purchase displays are intended to promote new products, make special offers, and/or capitalize on special events, such as holidays.
• POS displays are usually provided by product manufacturers for smaller stores while larger retail outlet with strong purchasing power , prefer to use sales material designed in-house to keep store layout and corporate themes consistent.

Key Terms

Disposable Displays

Displays made of cardboard or other inexpensive that can be discarded after use.

Impulse Buying

Buying prompted by an emotional reaction to an item that is strategically placed and designed in such a way as to motivate and cause a consumer to take action.

Light Box

A box like point of sale display using florescent bulbs to illuminate a poster inserted from the side or rear of the box.

Example

• Point-of-purchase displays can include shelf edging, dummy packs, display packs, display stands, mobiles, posters, and banners.

Introduction

At some point in your life, you have been motivated and stimulated to buy something on impulse: an unplanned and somewhat emotionally driven purchase. Don’t be ashamed. You aren’t alone. According to research, almost 66% of all decisions to buy something are made while people are in the store shopping. What’s more, 53% of these decisions are classified as impulse buying.

Point of purchase promotions offer marketers one of the most effective sales promotion tools included in the “promotional mix.”

Point-of-Purchase Promotion Defined

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:

• shelf edging
• dummy packs
• display packs
• display stands
• mobiles
• posters
• banners.

Note that POS can also refer to systems used to record transactions between the customer and the commerce, such as check-out registers, which are used at the point of sale. Don’t get confused if you see it used in this context.

How It Works

In smaller retail outlets, POS displays are usually supplied by the manufacturer of the products, but sited, restocked, and maintained by in-store salespersons. This is less common in larger retail outlets with strong purchasing power, because they control supplier activities and prefer to use sales material designed in-house to ensure that store layouts and corporate themes are consistent.

Common items that may appear in year-round POS displays are:

• batteries
• soft drinks
• candy
• chewing gum
• magazines
• comics
• tobacco
• writable CDs and DVDs.

POS displays are also useful in outlets with limited floor space, as a way to utilize the much wasted space around counters.

The disposable displays are usually covered with product branding. They are usually made out of cardboard, foam board, or Perspex/Plexiglas stands covered with plastic,and are easily replaceable. Displays are visually appealing because designers are able to make full use of color and special printing processes.

Non-disposable displays may include lighting for more visibility or include a cooler for drinks or ice cream. Some are as simple as a metal baskets that are easy to refill or re-stock, with a price sign and no design on the outside.

Light Boxes

A light box is the advertising industry term for a lighted POS display. These are similar to ones used by photographers, and use fluorescent bulbs to illuminate a poster that has been inserted into the light box from either the side or the rear.

Creating Point-of-Purchase Displays that Work

Setting up a display at a cash register, though simple in theory, requires planning and knowledge in order to deliver desired results. Poor results may be caused by:

• Failure to adhere to retailer’s size/space limitations. Proper fit, within the allotted space, increases chances for success.
• Failure to understand the store’s clientele and their true needs — Your product may have a multitude of benefits, but if the customers don’t need those particular benefits they won’t buy your product.
• Placing the display in the wrong location — Different areas in a store prompt different shopper responses. Not even a great display will stimulate a sale if the product is not in sync with the mind of consumer as the display is approached.
• Over design– Displays should be creative but simple, without encouraging consumer questions or objections.
• Not considering where consumers look when they shop — Displays should be designed with a shopper’s line of sight in mind. They won’t buy what they can’t see.

14.7.8: Online Sales Promotion

Learning Objective

Discuss on line sales promotion as a sales promotion method and relative to personal selling and sales promotion

Key Points

• Online offers and giveaways are simple and enable marketers to cultivate and gather valuable sales information such as demographics, statistics, and consumer buying habits.
• The Internet allows sales representatives to reach exponentially more potential buyers.
• Interactivity is the key to site stickiness.

Key Terms

Affiliate Programs

Affiliate programs transform site visitors to business partners by offering rewards for referral business.

search engine optimization

Search engine optimization offers a more organic, natural, and free way to garner a desired ranking on a search results page through the use of keywords.

Search Engine Marketing

Search engine marketing promotes websites by increasing their visibility on the search results page, usually through paid inclusion.

Example

• For software free trials, users often have to give payment or credit card information and other demographics before the download is allowed and the software is functional. This develops a relationship with the potential buyer and turns a “cold” prospect into a warm one.

Introduction

Sales promotion techniques are certainly not new but they have been revitalized through new media and technology, especially as it relates to online usage .

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:

• Advertising
• Loyalty and rewards programs
• Contests
• Search engine usage and optimization
• Social media
• Email blasts
• Referral marketing
• Affiliate marketing
• Inbound marketing
• Videos
• Coupons, premiums, rebates, and other discounts

Personal Selling – An Integral Part of the Online Experience

The personal touch often makes all the difference when selling. The development of a relationship with a sales representative created by a personal referral often makes the difference between an inquiry and a sale. Interactivity is the key to site stickiness. Through online sales promotion, relationships are developed, channels of communication are opened, and an exchange of information regarding a product’s benefits and a consumer’s needs occurs.

The Internet allows sales representatives to reach exponentially more potential buyers. Emails blasts can reach thousands of potential buyers at one time. Videos posted on websites like YouTube have the potential to go viral. Through content and inbound marketing, a sales representative is capable of offering specific, expert, and personalized information to site visitors. Social media enables a company and its sales team to make contact with like-minded individuals and to convert those who are unfamiliar with the product or service being sold. It adds new meaning to the phrase “cold calling”, which refers to a personal selling technique whereby a sales representative contacts people who are not expecting a call or sales pitch.

Affiliate programs transform site visitors to business partners by offering rewards for referral business.

Search engine marketing (SEM) promotes websites by increasing their visibility on the search results page. Placements can be purchased as “paid inclusions” or the value of website content can be increased by including keywords that are most often searched and used by individuals. The latter, also referred to as search engine optimization (SEO), offers a more organic, natural, and free way to garner a desired ranking on a search results page.

Giveaways

Online offers and giveaways are simple and enable marketers to cultivate and gather valuable sales and demographic information. Personal likes, personal experience, email addresses, payment information, and addresses are needed in order to deliver gifts, product samples, free information, or other “value added” items. Software companies do this all the time when they offer free downloads, stripped down versions of the software, or trial periods.

Look at the Results

Online sales promotions enable you to obtain measurable results. Online sales promotions also enable you to see what the competition is doing. Most importantly, online sales promotions enable you to identify what works and what does not, thereby saving you money and delivering you much more “bang for your buck. “