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- Sampling and Couponing
CHAPTER 16
© 2010 South-Western, a part of Cengage Learning PowerPoint Presentation by Charlie Cook
All rights reserved. The University of West Alabama
Eighth Edition
- Chapter Objectives
After reading this chapter you should be able to:
1. Appreciate the objectives of consumer-oriented sales
promotions.
2. Recognize that many forms of promotions perform different
objectives for marketers.
3. Know the role of sampling, the forms of sampling, and the
trends in sampling practice.
4. Be aware of the role of couponing, the types of coupons,
and the developments in couponing practice.
5. Understand the coupon redemption process and
misredemption.
6. Appreciate the role of promotion agencies.
© 2010 South-Western, a part of Cengage Learning. All rights reserved. 16–2
- Why Use Consumer Promotions?
• Promotions
Accomplish goals that advertising by itself cannot
Induce consumers to buy now rather than later
Encourage the buying of one brand rather than a
Encourage
competitor
competitor
Encourage consumers to buy more and more
Encourage
frequently
frequently
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 16–3
- Brand Management Objectives
• Brand Management
Is directed at influencing consumer behavior rather
Is
than initiating trade or sales-force action
than
Objectives are:
Generating purchase trial and retrial
Encouraging repeat purchases
Reinforcing brand images
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 16–4
- Consumer Rewards
• Utilitarian (Functional) Benefits of Rewards
Obtaining monetary savings (e.g., when using
Obtaining
coupons)
coupons)
Reducing search and decision costs (e.g., by availing
Reducing
of a promotional offer, consumers do not have to
think about other alternatives)
think
Obtaining improved product quality made possible by
Obtaining
a price reduction that allows consumers to buy
superior brands they might not otherwise purchase.
superior
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 16–5
- Consumer Rewards (cont’d)
• Hedonic Benefits of Rewards
Accomplishing a sense of being a wise shopper when
Accomplishing
taking advantage of sales promotions
taking
Achieving a need for stimulation and variety when
Achieving
trying a brand that might not purchased if it were not
for an attractive promotion
for
Obtaining entertainment value when, for example, the
Obtaining
consumer competes in a promotional contest or
participates in a sweepstakes
participates
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 16–6
- Consumer Rewards (cont’d)
• Other Rewards
Consumer promotions perform an informational
Consumer
function by influencing consumer beliefs about a
brand
brand
• Timing of Rewards
An immediate reward delivers monetary savings or
An immediate
some other form of benefit as soon as the consumer
performs a marketer-specified behavior
performs
Delayed rewards are those that follow the desired
behavior by a period of days, weeks, or even longer
behavior
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 16–7
- Major Consumer-Oriented Promotions
Table 16.1
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 16–8
- Notes on Table 16.1
• The classification of promotional tools is
The
necessarily simplified
necessarily
• Promotions are capable of accomplishing more
Promotions
than a single objective
than
• Manufacturers use consumer-oriented sales also
Manufacturers
to leverage trade support
to
• Coupons and premiums achieve different
Coupons
objectives depending on the specific form of
delivery vehicle
delivery
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 16–9
- Sampling
• Sampling
Any method used to deliver an actual- or trial-sized
Any
product to consumers
product
• Why Sampling Is Effective
It gives consumers an opportunity to experience a
It
new brand personally
new
It allows an active, hands-on interaction rather than a
It
passive encounter, as is the case with the receipt of
promotional techniques such as coupons
promotional
It is almost a necessity when introducing truly new
It
© 2010 South-Western, a part of
products that can afford this form of promotion
products
Cengage Learning. All rights
reserved. 16–10
- Sampling Methods and Media
• Mailed directly to households targeted by
Direct Mail Mailed
demographic characteristics or
geodemographics
geodemographics
• Samples included in magazines and
Newspapers
Newspapers Samples
and Magazines newspapers represent cost-efficient forms of
and
sampling for reaching a mass audience
sampling
• Allows considerable targeting and has
Door-to-Door
Door-to-Door Allows
Distribution advantages of lower cost and short lead times
Distribution
between a sampling request and when the
samples are delivered to targeted households
On- or In-pack • Uses the package of another product to serve
Uses
Sampling as the sample carrier
Sampling as
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 16–11
- Sampling Methods and Media
• Shopping centers, movie theaters, airports, and
High-Traffic Shopping
Locations special events offer valuable forums for sample
distribution
distribution
• Providing samples in grocery stores and other
In-Store
In-Store Providing
Sampling retail outlets for trial while consumers are
Sampling
shopping
shopping
• Choosing unique locations for sampling
Sampling at
Sampling Choosing
Unique Venues products appropriate for people at a certain
Unique
stage of life, referred to as change-point
stage hange-point
sampling
sampling
Internet • Distributing samples online through the services
Internet Distributing
Sampling of companies that specialize in online sample
Sampling
© 2010 South-Western, a part of
delivery
delivery
Cengage Learning. All rights
reserved. 16–12
- Figure 16.1
Sampling Charmin
via a Fleet of
Tractor Trailers
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 16–13
- Major Sampling Practices
Prudent Sampling
Practices
Using innovative
Targeting rather than Undertaking efforts to
distribution methods
mass distributing measure sampling’s
where appropriate
samples return on investment
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 16–14
- Calculating the ROI for a Sampling Investment
Table 16.2
Step 1: Determine the total cost of sampling, which includes the cost of the sample goods plus the
costs of distribution—mailing, door-to-door distribution, and so on. Assume, for example, that
the cost of distributing a trial-sized unit is $0.60 and that 15,000,000 units are distributed;
hence, the total cost is $9 million.
Step 2: Calculate the profit per unit by determining the average number of annual uses of the
product and multiplying this by the per-unit profit. Assume, for example, that on average six
units of the sampled product are purchased per year and that the profit per unit is $1. Thus,
each user promises the company a profit potential of $6 when they become users of the
sampled brand.
Step 3: Calculate the number of converters needed for the sampling program to break even.
(Converters are individuals who after sampling a brand become users.) Given the cost of the
sampling program ($9 million) and the profit potential per user ($6), the number of
conversions needed in this case to break even is 1,500,000 (i.e., $9 million divided by $6).
This number represents a 10 percent conversion rate just to break even (i.e., 1,500,000
divided by 15,000,000).
Step 4: Determine the effectiveness of the sampling. For a sampling to be successful, the
conversion rate must exceed the break-even rate with gains in the 10 to 16 percent range. In
this case, this would mean a minimum of 1,650,000 people must become users after trying
the sampled brand (i.e., 1,500,000 times 1.1) to justify the sampling cost and yield a
© 2010 South-Western, a part of
reasonable profit from the sampling investment.
Cengage Learning. All rights
reserved. 16–15
- When Should Sampling Be Used?
1. When the new or improved brand is
When
demonstrably superior or has distinct relative
advantages
advantages
2. When an innovative product concept is difficult
When
to communicate by advertising alone
to
3. When promotional budgets can afford to
When
generate consumer trial quickly
generate
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 16–16
- Sampling Challenges and Problems
• Expensive to implement
• Mishandling of mailing by distributors
• Distribution to the wrong market
• In- or on-package samples fail to capture
In-
current non-consumers
current
• Distribution does not reach sufficient
Distribution
numbers of consumers to justify its expense
numbers
• Misuse of samples by customers
• 2010 South-Western, a part of
© Subject to mail pilferage
Cengage Learning. All rights
reserved. 16–17
- Couponing
• Coupon
A promotional device that rewards consumers for
promotional
purchasing the coupon-offering brand by providing
cents-off savings
cents-off
Instant coupons
Mail- or media-delivered coupons
• Couponing Background
Nearly 280 billion coupons are distributed annually in
Nearly
the United States.
the
Cost to U.S. marketers is about $7 billion a year
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 16–18
- Illustration of Cents-Off Coupon Offers
Figure 16.2
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 16–19
- Coupon Distribution Methods
• Freestanding Inserts (FSIs)
• Handouts in stores
• Direct Mail
• Magazines
• Newspapers
• In- and On-Package
• Internet
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 16–20
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