Gift with Purchase Strategies

Transcription

1 Previous Menu 8.6 Gift with Purchase Strategies FOCUS Key questions and considerations for developing a gift with purchase strategy. By Rodger Stotz, CPIM, Maritz Inc., and Bruce Bolger, CPIM, Selling Communications, Inc. The gift-with-purchase offer is one of the oldest promotions going, probably even older than the venerable Cracker Jack prize-in-the-box promotions, which began in the early 1900s. What s more, the concept still works. Walk down any supermarket aisle, drop by any fast-food restaurant or thumb though any Sunday advertising supplement, and you ll find that gift-with-purchase strategies are still getting a heavy workout. Sometimes the gifts are substantial, as in sales blitzes for cars or other big-ticket items. In some industries, notably cosmetics, the tactic is so widespread that virtually no product moves without the promise of a gift. Questions To Consider Among the questions to consider when implementing a gift-withpurchase promotion are: Is it the right technique for your promotion objectives? Is the gift right for the target audience? Do you have the budget to support an effective gift-with-purchase program? Should you use a brand-name product for your program? Does the gift fit with your product s brand positioning and audience? Will the gift promote usage of your product? How do you intend to support your program with advertising and point-of-purchase material? 8.26

2 Planning The Program Here are some of the important issues you should consider when planning your gift-with-purchase promotion: Determine Program Objectives. Objectives should be spelled out in specific terms. Is it to rejuvenate sluggish sales? To maintain share during a competitive product introduction? To reach a new group of consumers? The simpler you can keep your objectives, the more measurable they will be. To define your objectives, review your company s history with gift-with-purchase programs. What worked? What didn t work as well? What kind of results can you expect? Determine The Budget. In general terms, your expenditures should be tied to anticipated incremental sales. Some companies set aside a certain percentage of overall sales for promotional spending, but there is no hard-and-fast rule for determining this percentage. Identify The Premium. Identify a gift-with-purchase premium that reinforces use of your product, appeals to your target audience and has a high-perceived value relative to the cost of your product. Determine Your Need For Outside Specialists. Who will supply the gift? Will you need a fulfillment specialist to see that the gift gets to the retail site. Put Together Your Game Plan. Plan your start and finish dates and determine who will be responsible for each step of the program. Most gift programs are limited-time promotions. Even Cracker Jack offers a specific gift for a specific period of time to maintain continued consumer interest. Define Measurement. Determine how you will measure results, and make sure you have a system in place to track them. Gather Support. Engage the support of everyone responsible for the success of your program, from employees to middlemen to retailers. Communicate regularly with all parties involved and see how the program might be supported through your sales and/or dealer incentive programs. 8.27

3 Evaluate The Results. Be objective about the results of your program and how it worked. Keep a record of your results and observations for use in planning future programs. Increased sales are, of course, the major factor you will use to measure the success of your gift-withpurchase promotion, but other factors you might look at include: Increased customer goodwill Retail and employee excitement about your product and offer Generation of repeat store visits or purchases Faster sell-through Budget Issues The cost of the gift can range from a few cents per item for small toy products like cereal-box gifts to hundreds of dollars for gifts that might be tied to new-car purchases or other high-ticket items. Perhaps more important is the cost versus the perceived value of the gift. Branded products often have a higher perceived value than nonbranded products. Other cost considerations include: Advertising and point-of-sale materials Getting the gifts and supporting point-of-sale materials to the stores and onto shelves The cost of staff or outside service firms dedicated to the execution of the program Any packaging changes that might be necessary Keep in mind that the costs should be balanced against your expected ROI for the promotion. This calculation should include a factor for repeat business that might be generated as a result of the gift. The Wrong Gifs Can Send The Wrong Message The wrong gift could possibly do more harm than good to an established brand image by sending a mixed message to consumers. There are ways to trim the budget if costs start to run too high. One option, for instance, is to cut back on advertising by running only print ads or by investing primarily in in-store advertising and point-ofpurchase materials. A factor often overlooked in budgeting: If the gift promotion is an unusual one, there may also be some opportunities for generating publicity. 8.28

4 Branded Or Non-Branded? Beware of cutbacks that may jeopardize the impact of the program. For example, you can save some money by using non-branded gift products, but there s a chance that this might affect the perceived value of the gift and diminish the returns of the program. If you re a manufacturer, look for ways to share the costs of the program with retailers. Similarly, a retailer that initiates a program might try to get manufacturers to chip in. There may also be some opportunities for promotional tie-ins to offset costs. Choosing A GiftWith-Purchase Premium Choosing the right gift to include with your offer is perhaps the most important issue connected with this type of program, say promotion specialists. Questions that you might ask yourself include the following. Brand Positioning? Does the gift fit in with my product s brand positioning? The wrong gift could possibly do more harm than good to an established brand image by sending a mixed message to consumers. Some experts also warn that the gift-with-purchase strategy is not particularly useful for new product introductions because it splits the focus of the consumer. That is particularly true if the gift involves a recognized brand: There s a danger that the consumer will perceive the new product as the gift. Meet Target Market? Does the gift make sense for my target market? Banks and other financial institutions that use free gift promotions often offer small household appliances, such as toasters or mixers, with the idea of attracting young people who are just setting up housekeeping. Marketers of food products targeted toward children cereals and candies, for instance often use toys as gifts. Support Brand Usage Does the gift support usage of the brand you are promoting? Will it generate goodwill to aid in a repeat sale? If you were promoting doughnuts, for example, a coffee mug would support future use of the product. If you re promoting toothpaste, a toothbrush makes perfect sense. 8.29

5 Tie To Promotional Theme? Does the gift tie in well with your overall promotional theme? A beach umbrella would work better than a rain umbrella for a Fun in the Sun promotional theme. Types Of Gift-WithPurchase Programs While a long history underscores the success that gift-with-purchase promotions have enjoyed, companies with a limited promotion budget may use similar but less expensive approaches. To keep costs down, companies often use these other value-added promotions: Self-Liquidators. Instead of an outright gift, the company offers consumers an item at a substantially reduced price, recovering some, or all, of the costs. Sweepstakes. The gift or premium is offered as a sweepstakes prize. Purchasers are entered into a sweepstakes with the possibility of winning a prize or prizes. Obviously, more expensive prizes can be offered to enhance the perceived value and increase consumer participation in the sweepstakes. Continuity Programs. The gift is offered for a specified number of repeat purchases or store visits to build customer loyalty and repeat business. Gift Coupons. The gift can be a dollars-off coupon for a product or service with a high-perceived retail value. Purchasers of Windows 98 software (an $89.90 purchase), for instance, are offered discount coupons totaling $392 off hotel accommodations, car rentals and airline tickets. Caveats Gift-with-purchase offers can give less-than-anticipated results if the gift fails to appeal to the target audience or offers a low perceived value in relation to the cost of the product. (Offering a free road map for the purchase of a new car would be an extreme example of the latter). In addition, if the product has enough stand-alone value, as is often the case with an eagerly anticipated software package or video, a gift-with-purchase offer may not significantly increase sales. 8.30

6 Some gift promotions, such as Cracker Jack and McDonald s Happy Meals, seem destined to go on forever. But be aware that it is possible to overuse gift-with-purchase programs. If a program goes on too long, consumers may come to expect a free gift, and they can be annoyed when the program is concluded. Consumers might also respond negatively if the gift is not perceived as being as valuable as a previous gift offer. Also, a predictable schedule for a company s gift promotions may train consumers to time their purchases so that they tend to buy only when a gift promotion is on. Uses of Prizes In Telemarketing If a prize is involved, the telemarketer must set forth the odds of receiving the prize, the fact that no purchase is necessary, how the consumer can participate without making a purchase, and any costs that the consumer must incur or conditions that he or she must fulfill to receive a prize. Keep in mind these requirements: Disclosures may be made either orally or in writing. Telemarketers must identify their company and inform the customer that the purpose of the call is to sell goods and services. If the telemarketer obtains payment by check or other negotiable instruments, the consumer s express written authorization or express oral (tape-recorded) authorization must be obtained by the telemarketer before submitting it for payment. Telemarketers may not call consumers who have placed themselves on the federal Do Not Call registry. 8.31