© 2010 South-Western, a part of Cengage Learning
All rights reserved.
PowerPoint Presentation by Charlie Cook
The University of West Alabama
Eighth Edition
Premiums and
Other Promotions
CHAPTER
17
1. Understand the role of premiums, the types of
premiums, and the developments in premium
practice.
2. Recognize the role of price-off promotions and bonus
packages.
3. Be aware of the role of rebates and refund offers.
4. Know the differences among sweepstakes, contests,
and games, and the reasons for using each form of
promotion.
5. Understand the role of continuity promotions.
Chapter Objectives
After reading this chapter you should be able to:
© 2010 South-Western, a part of Cengage Learning. All rights reserved. 17–2
6. Appreciate retailer-driven promotions.
7. Evaluate the potential effectiveness of sales
promotion ideas, and appraise the effectiveness of
completed promotional programs.
Chapter Objectives (cont’d)
After reading this chapter you should be able to:
© 2010 South-Western, a part of Cengage Learning. All rights reserved. 17–3
© 2010 South-Western, a part of
Cengage Learning. All rights

© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 17–6
Premiums
Premiums
Free-with-
Free-with-
Purchase
Purchase
Premiums
Premiums
•
Delayed reward to consumers primarily
Delayed reward to consumers primarily
designed to generate trial purchases
designed to generate trial purchases
•
Perceived value of a premium item, or gift,
Perceived value of a premium item, or gift,
depends on the value of brand offering gift
depends on the value of brand offering gift
Mail-In Offers
Mail-In Offers
•
Delayed reward to consumers primarily
Delayed reward to consumers primarily
designed to generate trial purchases.
designed to generate trial purchases.
•
Few consumers exposed to free mail-in offers

Figure 17.1
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 17–8
Premiums
Premiums
“
“
Buy X, Get 1
Buy X, Get 1
Free” Offers
Free” Offers
•
Represents an immediate reward to
Represents an immediate reward to
consumers, and, for manufacturers
consumers, and, for manufacturers
•
Rewards a brand’s loyal customers or
Rewards a brand’s loyal customers or
encourages trial from purchasers of
encourages trial from purchasers of
competitive brands who are willing
competitive brands who are willing
to switch in order to save money
to switch in order to save money
Self Liquidating
Self Liquidating
•
Consumer mails in proof-of-purchase with

based on an explicit detailing of what is to be
based on an explicit detailing of what is to be
accomplished
accomplished

Premium items must be compatible with the brand’s
Premium items must be compatible with the brand’s
image and appropriate for the target market
image and appropriate for the target market
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 17–10
Price-Offs
Price-Offs
•
Price-Offs’ Marketing Objectives:
Price-Offs’ Marketing Objectives:

To reward present brand users
To reward present brand users

To get consumers to purchase larger quantities than
To get consumers to purchase larger quantities than
normal
normal

To establish repeat purchases
To establish repeat purchases

To ensure promotion dollars reach consumers


No more than 50% of annual volume from promotion
No more than 50% of annual volume from promotion

Manufacturer must provide display materials
Manufacturer must provide display materials

Dealer required to show regular and promotion prices
Dealer required to show regular and promotion prices
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Cengage Learning. All rights
reserved. 17–12
Bonus Packs
Bonus Packs
•
Bonus Packs
Bonus Packs

Are extra quantities of a product that are offered for
Are extra quantities of a product that are offered for
the same price
the same price

Offer an alternative to price-off deals
Offer an alternative to price-off deals

Will be purchased by regular customers who would
Will be purchased by regular customers who would
have purchased the brand anyway
have purchased the brand anyway

reserved. 17–14
Rebates and Refunds
Rebates and Refunds
•
Rebate (also Refund)
Rebate (also Refund)

Refers to the practice in which manufacturers give
Refers to the practice in which manufacturers give
cash discounts or reimbursements to consumers who
cash discounts or reimbursements to consumers who
submit proofs of purchase
submit proofs of purchase

Offers consumers delayed rather than immediate
Offers consumers delayed rather than immediate
value, since the consumer must wait to receive the
value, since the consumer must wait to receive the
reimbursement
reimbursement

That goes unredeemed is a “phantom rebate”
That goes unredeemed is a “phantom rebate”

Can attract switchers from competitive brands who
Can attract switchers from competitive brands who
avail themselves of attractive discount offers
avail themselves of attractive discount offers
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Cengage Learning. All rights

proofs of purchase cannot
be required as a condition for entry
be required as a condition for entry
•
Sweepstakes as a Promotional Tool
Sweepstakes as a Promotional Tool

Are relatively inexpensive and simple to execute
Are relatively inexpensive and simple to execute

Reinforce brand positioning and image
Reinforce brand positioning and image

Attract attention to advertisements
Attract attention to advertisements

Promote increase brand distribution at retail
Promote increase brand distribution at retail

Foster sales force enthusiasm
Foster sales force enthusiasm

Can reach special groups
Can reach special groups
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 17–18
Illustration of a
Sweepstakes
Offer


Direct consumers to register online to participate in
Direct consumers to register online to participate in
sweeps or contests
sweeps or contests

Create brand awareness, build consumer interaction
Create brand awareness, build consumer interaction
with a brand, and enable expansion of a brand’s opt-
with a brand, and enable expansion of a brand’s opt-
in e-mail database
in e-mail database
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 17–21
Illustration of a
Promotional
Contest
Figure 17.5
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 17–22
Continuity Promotions
Continuity Promotions
•
Continuity Promotions
Continuity Promotions

cooperatively
cooperativelyfrom different firms
from different firms

Printed coupon with an mail-in entry contest form
Printed coupon with an mail-in entry contest form

Increases the likelihood that consumers will attend a
Increases the likelihood that consumers will attend a
promotional message that cuts through clutter
promotional message that cuts through clutter
© 2010 South-Western, a part of
Cengage Learning. All rights
reserved. 17–24
Overlay and Tie-In Promotions (cont’d)
Overlay and Tie-In Promotions (cont’d)
•
Tie-in (Group) Promotion
Tie-in (Group) Promotion

Is the simultaneous promotion of multiple brands in a
Is the simultaneous promotion of multiple brands in a
single
single
intracompany or intercompany (joint)
intracompany or intercompany (joint)
promotional effort