Premiums


A second form of consumer promotion is the offer of a premium. Premiums are prizes, gifts, or other special offers consumer receive when purchasing products. When a company presents a premium, the consumer pays full price for the good or service, in contrast to coupons, which grant price reductions

Some marketing experts believe overusing coupons damages a brand's image. Conversely, premium can actually enhance an image. The key is to pick the right type of premium. Premiums can be used in the attempt to boost sales; however, they usually are not as successful as counpon sales. Nevertheless, premiums remain a valuable consumer promotional tool. In the united States, over $4.5 billion is spent on premium each year.


Type of Premium

1. Free-in-the-mail premium --- are gift individuals receive for purchasing products.

Marketing Objectives :

• Promote multiple purchase of brand(s)

• Increase brand recognition and customer awareness

• Encourage new or additional uses for brand

• Make brand more user-friendly

• Reward loyal consumers

Benefits of Free-In-The-Mail Premiums :

• The premium adds value

• No need for elaborate packaging of premium

• Provides consumers with value-added, brand-related premium

• Larger premiums can be offered


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2. In-or on-package premium--- are usually small gifts, such as toys in cereal boxes.


Marketing Objectives :

• Increase brand visibility and customer awareness

• Revitalize a mature brand

• Promote multiple purchase through continuity premiums

• Encourage new or additional uses for a brand

• Reward customer loyalty

Benefits of In-or on-Pack Premiums :

• Impact at point-of-sale due to visibility of premium

• Immediate consumer gratification

• No redemption or couponing cost

• Added value provided

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3. Store or manufacturer premium--- are gifts given by either the retail store or the manufacture when the customer purchases a product.


Marketing Objectives :

• Increase brand visibility and customer awareness

• Encourage brand trial

Benefits of store or manufacture Premiums :

• Premium adds value to your brand


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4. Self-liquidating premium--- require the consumer to pay an amount of money for a gift or item.

Marketing Objectives : offer low price to attractive more customers

Benefits of self-liquidating premiums : manufacturer receive money for shipping and handling


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McDonald's Singapore Premium Brewed Coffee TV Ad








Keys to Successful Premium Programs


  • Match the premiun to the target market

  • Careful select the premium ( avoid fads, try for exclusivity)

  • Pick a premium that reinforces the firm's product and image

  • Integrate the premium with other IMC tools ( especially advertising and POP displays)

  • Don't expect premium to increase short-term profits



To learn more about premium you can visit these sites:

http://www.berr.gov.uk/whatwedo/consumers/fact-sheets/page38333.html

http://pcworld.about.com/od/officehardware/Dell-to-Offer-Premium-Support.htm

http://wehner.tamu.edu/mktg/faculty/varadarajan/publications/Joint%20Sales%20Promotion%20BH%201985.pdf






Reference:

Building brands with premiun-based promotion. ( n.d.) http://www.milmour.com/milmour/types_of_premiums.asp