Fact: The success of
your brand depends on whether consumers buy your product or
service. And it’s your job to motivate them to do so.
Well-designed, coordinated premium promotions are powerful
motivators that can simultaneously provide the impetus to buy and
reward consumers for buying. They also stimulate consumer
participation in the brand. Technology makes it feasible to create
highly targeted interactive programs. Premiums can play a key role
in what spurs people to collect points for merchandise, register
on a Web site or listen to a promotional message.
As premium programs are now easier to monitor and track, the
actual selection of premiums available has expanded. Both factors
can help marketers build more effective promotions.
The Basics
Simply stated, consumer premium promotions use gifts, often
imprinted, to get buyers to try, buy or remain loyal to a
particular brand. There are several vehicles:
- In-pack, on-pack, near-pack: The
gift is packaged in, on, or near a product. (e.g., a free
razor with shaving cream).
- Self-liquidator/free mail-in:
Consumers can either buy the gift at a low cost (the sponsor
breaks even) or receive it free by mail as a reward for using
the brand.
- Continuity/frequency program: A
gift to loyal consumers as a reward for repeat business.
- Gift with purchase: An item that
prompts people to make or increase purchases at the point of
sale.
- Sweepstakes/contests/games:
Promotions with prizes to get customer attention and generate
increased response.
Other examples include
traffic-builders, door-openers, direct mail and online programs.
Premium Power
Creative premium promotions can deliver brand-enhancing,
sales-building results. An article in Promo magazine perhaps
stated it best: “If brands are reacquainting themselves with the
full promotional arsenal, marketers can’t continue to overlook a
workhorse like premiums.”
Consumer premium programs are strong for three reasons:
- Immediacy. Many promotions are
instantaneous rewards that provide immediate gratification.
- Impact. A premium is a tangible
and long-lasting, as opposed to cash, that too easily
disappears into a wallet.
- Measurability. When marketers
know their costs, the campaign’s scope and its objectives, a
consumer premium becomes a highly measurable marketing tool.
Premium Promos In Action
In their definitive book, Incentives in Marketing &
Motivation, George Meredith and Robert Fried note that the first
true consumer premium promotion was a frequency program done in
1851 by Babbitt’s soap. Buyers could redeem 25 soap wrappers for
a color lithograph.
These days, the climate for premium promotions is favorable.
Consumer premium programs are more conspicuous. For instance, many
snack food and candy companies offer redemption programs for
logoed apparel, small electronics, and other items. Tic Tac, for
one, launched “Incredible Stuff.” Consumers saved Tic Tac
labels and collected points, which could be redeemed for products
such as a logoed backpack, beach towel, raft, CD holder, watch,
T-shirt or water bottle.
All sorts of firms use consumer premiums for all sorts of reasons:
brand awareness, customer retention, new product intros, stimulate
multiple-unit purchases, build repeat purchase, enhance image,
reinforce brand claim/promise/mission, create goodwill, etc.
They’re used by, among others, tobacco companies, hotel chains,
pharmaceutical firms, cosmetics manufacturers, insurance companies
and oil companies.
Among the most ardent users are cereal companies, which discovered
the hard way that there’s a direct correlation between premiums
and sales. “They [stopped] using them and saw sales suffer as a
result,” says promotional consultant Kevin Hess. “But in the
past few years, every cereal box has some kind of … offer,
especially kids’ cereals.”
Typical of this, Kellogg Co. leveraged the timeless appeal of
Sesame Street to add impact to its in-packs. After signing a
licensing agreement, it inserted Sesame Street Mini Beans, a line
of plush beanbag toys, into 25 million boxes of eight cereal
brands. The inside of the boxes featured games, quizzes, and
cutout activities. This program not only marked Kellogg’s return
to in-packs (it had stopped in 1995) but it was the highest-value
premium in the firm’s history.
Significant Trends
Consumer premium promos are also proving effective in today’s
techno-savvy marketplace. By stimulating brand participation,
companies can collect data on buyers and tailor future promotions
to them, trying to make the relationship interactive.
Premiums offer marketers a tool to drive traffic to a Web site.
Gifts used for online promotions provide a tangible reward from
cyberspace. Digital premiums, such as screensavers and other
downloadables, are coming into their own. For example, to push its
Pampers brand of diapers, Procter & Gamble offered parents a
digital baby book for registering on its Web site. This opened the
door for ongoing e-mail dialog.
The Net can also help manage and track incentive and premium
transactions. Digibates, a payment processing system, allows
sponsoring firms to manage all rebate, incentive and refund
transactions on a single platform. As it supports cash and
non-cash awards, a sponsoring firm can track which awards work
best for each customer.
Many firms are also getting involved in co-branding. “They [can]
share budget and lower overall costs, double the sales impact, and
create a newsworthy event,” says counselor Paul Kiewiet.
Licensed properties also tend to be hot – sports teams,
cartoons, rock groups etc.
For instance, to make the most of the re-release of E.T., Kraft
Foods decided on in-pack premiums and a sweepstakes.
The Payoff
Estimating the cost of a consumer premium is complicated, but the
potential payoff is high. Remember to factor in costs for the
product, packaging, displays, logistics, collateral materials,
promotion, distribution, fulfillment/mailing, tracking,
administration and evaluation. It’s important to consider all
elements carefully. Trial and error can produce a flop. Remember;
your counselor can help you with nearly every aspect.
Hows, Whys
Your counselor can show you hundreds of thousands of items to
choose from. Premiums can also be custom-designed for a
brand-specific promo. Then ask, low-end or high-end? Should you
use brand-name goods? Does the premium support the brand’s
image? Does it add value to the brand? Will it appeal to the
target audience?
Hess suggests some guidelines – Offer premiums that enhance the
brand; Capitalize on the equity of your brand’s logo/mascot by
incorporating it into the premium item.
Avoid generic items that are readily available at retail. Choose
items especially suited to the brand.
Legal End
Legal regulations, safety, and FDA compliance can come into play
with consumer premiums. Postal regulations are key. “The big one
is the FTC’s mail-order rule, which states that if you make an
offer to the consumer you must fulfill it within 30 days unless
you specify otherwise,” says Kiewiet. “That’s why so many
offers say, ‘Allow six to eight weeks for delivery.’”
Premium laws vary from state to state. “Certain states are
tougher than others,” says Hess. “Some require simply labeling
the package if the premium is not suited for all ages. Others
settle for any notification on the package. Other states require
notification on every part.”
If appropriate, safety testing can be done by one of the two major
testing agencies, ACTS and STR, which specialize in premium
promotions. “It takes as little as a week and usually costs
under $2,000,” Hess says.
All told, consumer premiums can help you be successful. Just
remember to play by the rules.
Cynthia Ironson is a contributing editor to Imprint.
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