Consumer Promotions

Published October 25, 2013 by Mayrbear's Lair

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Marketers today try to comprehend the psychology of consumers and focus much of their research on consumer behavior. This helps them understand the following components: (a) how actions shape an individual’s identity, (b) the impact it has on their target audience and their families, and (c) how their consumption habits affect the environment. Jansson-Boyd (2012) explains that human consumption has become an integral part of society. From a business perspective, it is imperative that advertisers have a clear understanding of the effects these habits have on human behavior to better serve their customers. In other words, companies have more successful outcomes when they focus on figuring out how individuals are influenced based on their behavior with respect to the materials they acquire. The information they gather is used to determine how and why they are engaged in certain activities and what affects them in order to help influence that behavior (Jansson-Boyd, 2010). Knowing how people process information and in turn how they will respond, can also help marketers predict future behavior. This is useful data for developing consumer promotion strategies to generate more traffic and build long lasting brand loyalty. Consumer promotions are typically developed as exciting events to entice consumers to investigate further into a company’s merchandise so that they will purchase their goods. The focus of this research is centered on the various methods advertisers develop to influence consumer behavior by incorporating different types of promotional strategies to their campaigns to stimulate the buying process. The study will examine seven kinds of consumer promotion models including: (a) refunds and rebates, (b) contests, (c) sweepstakes, (d) premiums, (e) coupons, (f) in-store, and (g) trade shows. As an example to help illustrate these concepts, the research is influenced from my own personal experiences as a young corporate executive in the promotion department at EMI America Records in Hollywood. The study will take a closer look at the variety of strategies a record company will utilize to introduce a new artist and to help promote their music products. The findings of this research will conclude that consumer promotions drive patrons to buy products because they stimulate excitement, add fun to shopping, and create a memorable experience.

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Contests

Consumer promotions are meant to drive people towards a company’s products. Smart advertisers know that in addition to delivering an awesome product, to attract and keep loyal clients, exceptional customer service also plays a key role to their success. Baack and Clow (2012) postulate, that in the past, many experts were under the impression that any type of sales promotion could contaminate a brand’s reputation. However, because of the vast amount of market place competition, advertisers are developing more clever methods to lure consumers into making a purchase. Promotions are an effective way to generate interest and excitement to attract shopper attention and activity (Baack & Clow, 2012). One method marketers use to spawn excitement about a new product is holding a contest. Contests require audience participation and can create a buzz about a new product. For example, record companies work in partnership with radio stations and music store outlets to set up various kinds of contests to attract attention. When an artist comes out with a new album, for instance, conducting a contest in conjunction with a radio station is a sure way to generate a buzz. First of all, radio stations work with record companies and provide free publicity from the airplay of the new album. To generate more of a thrilling experience, the radio station will hold competitions by offering callers incentives like free concert tickets or a chance to win the artist’s new album if they are logged in as the fifteenth caller, for instance or have the correct answer to a certain trivia question. These types of promotions not only generate excitement and interest in the artist and their new product, it also serves to help bring more listening traffic to the radio station. This choice of promotion is ideal and if planned well, can serve the music company, the artist, the radio stations, and the concert promoter.

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Sweepstakes

Without consumer promotions, a company’s product can get lost in the crowd. Cummins and Mullin (2010) state flatly, that the main goal of marketers is to drive consumers to buy products and sales promotions are effective for achieving those outcomes. People go shopping because they want a rewarding experience (Cummins & Mullin, 2010). In other words, people purchase merchandise because it makes them feel good and sales promotions, like sweepstakes, are one way of adding fun to the buying equation. In a sweepstakes promotion, purchases are not necessary for participation and generally shoppers are encouraged to enter as often as they want. In these kinds of promotions, probability determines the outcome so merchandisers are required to reveal the odds of winning in advance. This displays a company’s fair business practices and helps build trust. A record company, for instance, will incorporate a sweepstakes event into their promotion campaign because they add both extrinsic and intrinsic value. For example, to add extrinsic value and make the promotion more attractive, the record label may include an all-expense paid trip to Hollywood, California for entry winners to attend an artist’s concert. In addition, they may offer free promotional material, like t-shirts, special concert related program books, and other paraphernalia merchandise to support the release of the new album.  Sweepstakes promotions are similar to contests, in that they require participation and necessitate the use of some kind of skill, such as sharing stories centered on the theme of the album or the submission of an original song. People that enjoy competition events will participate because: (a) it is fun, (b) they want to demonstrate their abilities, and (c) it presents an opportunity to meet the artist. Marketers have discovered that offering discounts only are not as effective in generating excitement over their products, and by designing promotions into their advertising campaigns, such as contests and sweepstakes, they become extremely efficient for generating a positive experience and attracting more business.

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Refunds and Rebates

Consumer promotions stimulate excitement in a company’s brand. Refunds and rebate strategies are cash incentives offered to buyers once they purchase merchandise. Baack and Clow (2012) submit that this strategy is more effective when they it is perceived as an original idea and usually motivate buyers to change their behavior (Baack & Clow, 2012). To receive the reward, the consumer must provide a proof of purchase and mail it to the designated organization to redeem their prize. This is not a very popular method because many people do not want to take the time to mail in the required documentation, follow-up, or even wait for that matter. However, if the prize is enticing enough, consumers will participate. Music companies can use this strategy to help promote the release of an artist’s new album as well as their concert events. For example, a rebate offer can be an effective method to entice consumers to purchase a special limited edition of the music product offered exclusively at certain outlets only that includes concert tickets as part of the rebate strategy. This promotes the record label, the music store retailer and the concert promoters. Plus, it also helps fans save money on costly concert events while encouraging sales for higher ticket items such as special collector products. These effective strategies assist advertisers in generating more sales, build brand loyalty, that can also lead to additional purchases. This model draws attention to the brand and is a great way to engage and win new supporters.

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Premiums

To put it simply, promotions are developed for consumers to help create a rewarding shopping experience for them. Calder and Tybout (2010) assert that human behavior is motivated by goals. Goals are a reflection of a fulfilling future that is driven by an individual’s desires, aspirations, hopes, and dreams. The value individuals attach to their solutions varies by the degree of the problem solved or goal they want to achieve. Taking this concept into consideration, advertisers engage in competitive marketing as a valuable tool that provides consumers a means to achieve their goals (Calder & Tybout, 2010). Sales promotions that offer premiums in the form of prizes, gifts, or other special offers, are also useful for getting people excited about a company’s brand. Typically there are four kinds of premiums that a company offers: (a) free-in-the-mail, (b) in-or on-package, (c) store or manufacturer, and (d) self-liquidating. A music company, for instance, may offer two albums for the price of one as a premium bonus. This strategy promotes a new release and is also effective for moving older inventory. Another popular strategy is to provide personalized autographed merchandise as a premium because that has value that no other company can offer. This is highly effective because any item that is specifically autographed to an individual from the artist will inherently add more value to that product and is a successfully proven promotional strategy.

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Coupons

Consumer promotions are typically developed to make shopping a memorable experience. Advertisers that include coupon promotions in their campaigns do so to offer a price reduction to stimulate consumer interest. Baack and Clow (2012) purport that out of 188 billion coupons issued in a year, about 1.6 billion were redeemed (Baack & Clow, 2012). Studies suggest that manufacturers issue about 80 percent of all coupons produced and are delivered through print media systems, although with advances in technology, coupons are now also offered digitally through social media and smartphone outlets. In addition, some companies use cross-ruffing techniques to promote other products. For example, a record company that wants to promote a new soundtrack album that features a song by one of their artist’s, may include a redeemable movie ticket coupon with their music album purchase. This strategy promotes the artist, the record company, as well as the movie company that made the investment in the artist to compose a new track to support the film. Companies that work together can share advertising costs as well as create an unforgettable experience for consumers.

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Trade Shows

Trade show promotions offer incentives that are also effective for enticing consumers to purchase products.  Trade shows can build a company’s business rapidly in just a few short days.  Abrams and Bozdech (2006) explain that trade shows consist of a large number of industry contacts, potential suppliers, and important buyers.  These key players are brought together at one venue.  In fact, trade shows are very successful because: (a) they attract significant clients, (b) they introduce new products, (c) produce real prospects, and (d) they enhance relationships (Abrams & Bozdech, 2006).  The main objective of a trade show is to bring industry professionals together to feature new or existing merchandise to impress existing vendors and attract new ones.  Music industry trade shows are designed to showcase the company’s artists and will include live performances.  This tactic provides entertainment as well as gives attendees the opportunity to sample the music and meet the artists in person.  In addition, it is a great public relations strategy which allows other industry heavy weights the opportunity to view the competition, meet these talented performers, as well as enjoy some quality entertainment.

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In-Store Promotions

The goal of an advertiser is to drive consumers to buy their products. Cummins and Mullin (2010) advise that in-store promotions conducted by specially trained staff members that offer incentives to motivate a crowd, is still one of the most effective ways to generate substantial business (Cummins & Mullin, 2010). In-store promotions are the most common methods companies employ as part of their sales promotion strategies. For example, a music company that is looking to promote a new album or artist will develop an in-store promotion because it is the most effective means to generate excitement around a new product. This strategy offers the general public an opportunity to listen to the product as well as meet and mingle with the artists face-to-face. Depending on the magnitude and celebrity of the artist, these kinds of promotions tend to generate the largest crowds because they provide fans an opportunity to experience direct contact with their music heroes. This plan makes the brand stand out above the competition because of the unique abilities and talent of the artist who can strike a deep emotional chord from their supporters. In addition, once consumers are enticed to visit the retail outlet, when the promotion concludes, people remain free to roam the facility to explore other purchasing options. In-store promotions of this nature are appealing to merchants because of the inherent ability to draw a large crowd by those interested in meeting a celebrity in person. In addition, it helps create a long lasting buzz for the company in the community, especially from those who were fortunate to have been a part of the experience. When a celebrity is associated with a particular music retail chain like the Virgin Megastore or other outlets where their music is sold like Barnes and Noble, the chains become favorites because of the memories consumers experience during those events.  In-store promotion strategies work the best for a record label due to the artist’s power of attraction.  Plus, consumers do not have to pay an admission price to attend them like they would a trade show or concert event.

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Conclusion

Consumer promotions offer the public a fun way to go shopping. Cummins and Mullin (2010) suggest that the use of sales promotions in their campaigns is one of the most effective ways a company stimulates excitement, encourages retail response, and offers valuable rewards. These marketing strategies serve to create an exhilarating and unforgettable experience for consumers. A good sales promotion will make consumers stop and think about a brand and if it has the right impact, will cause them to follow through on their feelings to purchase their products (Cummins & Mullin, 2010). Today’s consumer is looking for more than just making a purchase; they want to have an experience that will transform them. Sales promotions can do that by offering novelty, excitement, and even humor at the point-of-purchase. These are significant components that consumers respond to and motivates them to help build brand loyalty. Consumer promotions are meant to create a  rewarding shopping experience; one that motivates consumers to purchase products and tell their friends about it. The findings of this research conclude that without effective promotional sales strategies a brand’s products can get lost in the crowd.

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References

Abrams, R., & Bozdech, B. (2006). Trade show in a day: Get it done right, get it done fast! Palo Alto, CA: The Planning Shop.

Baack, D., & Clow, K. (2012). Integrated advertising, promotion, and marketing communications (Fifth ed.). Upper Saddle River, NY: Pearson Education, Inc.

Calder, B., & Tybout, A. (2010). Kellogg on marketing (Second ed.). Hoboken, NJ: John Wiley and Sons, Inc.

Cummins, J., & Mullin, R. (2010). Sales promotion: How to create, implement and integrate campaigns that really work (Fifth ed.). London, UK: Kogan Page.

Jansson-Boyd, C. (2010). Consumer psychology. New York, NY: McGraw-Hill Education.

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