Gift with Purchase - Trade Loaders - Incentive Programs

Gift With Purchase - Trade Loaders - Incentive Programs

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Gift with Purchase - Trade Loaders - Incentive Programs

By: William Kestin - CEO APPA - (Australasian Promotional Products Association)
Vice President IFPPA - (International Federation of Promotional Products Associations)

The strategy to buy a service or product by using trade loaders or a gift with purchase dates back to the very dawn of marketing itself. It's a concept that still works today. Walk down any Coles 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 providing marketers with sound, profitable business opportunities.

Trade loaders are still being used to promote better placement on the shelves or entice sales people to promote retail lines more rigorously. Sometimes the gifts are substantial (as in plasma televisions and Ipods). But most are associated more strategically in line with the product being promoted, like a cosmetic bag linked to a new range of make-up.

PLANNING YOUR PROGRAM
Here are some of the important issues to consider when planning your gift-with-purchase or trade loader promotion:

  1. Determine your program objectives. These should be spelled out in specific terms. Is it to rejuvenate sluggish sales? To maintain market share during a competitive product introduction? To reach a new group of consumers? The more specific you keep your objectives, the more measurable they will be.

  2. Review your history. What has your company done in the past with gift-with-purchase programs? What has worked and what didn't? What kind of results can you expect? What history can you obtain on your competitors attempts at such programs?

  3. Determine your 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. In this current competitive market, on average, the yearly promotional product spend by most companies are up by 30%.

  4. Determine who will be the outside promotional product specialist to supply the item. Ad agencies purchase directly from promotional products companies and simply ad their mark up. The one stop shop rule doesn't apply here. Promotional product companies normally work with clients to guide through product selection, logo application, manufacture and fulfilment. Remember, your core business is not to manufacture, source or fulfil these products and paying your ad agency to be the middle man wastes money that could be applied to your budget. Save time and money by using a product professional who can guide you to the correct product selection, point of sale materials, help with creativity and logistically organise fulfilment on the job.

  5. Identify a gift-with-purchase product that reinforces use of your brand. One that appeals to your target audience and has a high perceived value (relative to the cost of your product). Will this product be custom designed by your promotional provider or "off the shelf"? Brand name or generic? Logistically fulfilled internally or outsourced to the promotional product provider?

  6. Make sure the company you deal with are members of APPA (The Australasian Promotional Products Association). APPA Members are much more likely to help you avoid some costly pitfalls and it gives you recourse if the job goes wrong. 90% of complaints made to APPA are made against non-APPA companies and the association if powerless to intervene on your behalf.

  7. 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. Every effective program offers a specific gift for a specific period of time to maintain continued consumer interest.

  8. Determine how you will measure results. And make sure you have a system in place to track those results. Gift with purchase and trade loader programs supply a unique opportunity to track your exact spend and the compare, historically, the increased results.

  9. Engage the support of everyone responsible. In order to have success in your program, communicate expectations regularly with all parties involved (employees, managers, promotional product company and retailers) and do it in written form (update e-news blasts or memos). Build a team that shares the same goals and verify how the program will be supported through your sales and/or dealer incentive programs.

  10. 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.

MEASURING YOUR RESULTS
Increased sales will be the major factor you will use to measure the success of your gift-with-purchase promotion, but other factors should include:

  • Increased customer goodwill;
  • Retail and employee excitement about your product and offer;
  • Generation of repeat store visits or purchases;
  • Faster sell-through.

These factors can be measured by on line surveys, retailer visits or website feedback requested directly to your customers.

BUDGET CONSIDERATIONS
The cost of the gift can range from a few cents to hundreds of dollars. Perhaps more important is the cost versus the perceived value of the gift. Branded products often have a higher perceived value than non-brand products but obviously cost more money.

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. This includes tooling costs for repackaging and re-printing of supporting paper materials.

Keep in mind that the costs should be balanced against your expected return on investment for the promotion. This calculation should include a factor for repeat business that might be generated as a result of the promotional product.
With an advent of the internet, promotions (or their redemptions) can be run on line. Pepsi has done this effectively by driving business to their website to register to win gifts. Some promotional companies can design temporary websites for these types of promotions. It is important to consider that the additional step in the process may limit some redemption, but it can provide some immediate, traceable data on campaigns.

If you're a manufacturer, look for ways to share the costs of the program with retailers and vice-versa. There may also be some opportunities for additional promotional tie-ins to offset costs (for instance co-sponsorship with other organisations).

Another option is to cut back on advertising by running only print ads or by investing primarily with in-store advertising and point-of-purchase materials. If the gift promotion is an unusual one, there may be some opportunities for generating publicity in the media. But beware of too many cutbacks; they may jeopardize the impact of the program.

CHOOSING A GIFT-WITH-PURCHASE OR TRADE LOADER
Choosing the right promotional product to include with your offer is perhaps the most important issue connected with this type of program.

Questions that you should be asking your promotional product provider:

  • Does the gift fit in with my product's brand positioning? The wrong gift will send a mixed message to consumers. Some experts also warn that the gift-with-purchase strategy is not always useful for completely new product introductions because it may split the focus of the consumer. Ensure clarity in promoting the new product that differentiates between the gift and the new product being launched.

  • Does the gift make sense for my target market? Banks and other financial institutions have used lifestyle and comfort based gifts to avoid being seen as impersonal. Marketers of food products targeted towards youth markets often use collectables tied into animated characters or electronic games. Request your promotional product company research if licensing with a brand (like Disney or Playstation) could substantially increase your sales.

  • Does the gift support usage of the brand you are promoting? Will it generate goodwill to aid in a repeat sale? If you're promoting donuts, for example, a coffee mug would support future use of the product. If you're promoting toothpaste, a toothbrush. Cosmetics, a mirror. These are obvious choices, but the best ideas aren't.
  • Does the gift tie in well with an overall promotional theme? The item should be different, creative and illicit a response from the purchaser? Themed or seasonal promotions are more memorable and create future marketing tie-in potential.

VARIATIONS AND ALTERNATIVES
Companies with a limited promotion budget may consider similar, but less expensive, approaches. To keep costs down, companies often use these other value-added types of 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. Purchasers are entered into a draw with the possibility of winning prizes. Make sure the promotional product company, provides the legal requirements for documentation of registration in each state before running this type of promotion (They must be paid for and registered separately in every state of Australia where the draw is being entered).

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 with a high perceived retail value. These types of coupons are not a good option. Once they are redeemed the recipient often forgets they received value for the purchase. Also, "Experience" based promotions (balloon rides or discount movie/theme park vouchers) should be avoided as they are often not redeemed, or when they are, you have lost any long term value. Actual gifts with purchase last longer and will keep brand retention longer.


PACKAGING AND MERCHANDISING
Most consumer purchase decisions are made at the point of sale. That makes packaging and merchandising critical to the success of most gift-with-purchase promotions.

Effective execution can make the difference between mediocre and spectacular results. This includes obtaining extra shelf or display space. It is important to explore the design capabilities of your promotional product provider, thus bi-passing the expense of an outside ad agency or tapping into your own resources. Many promotional product professionals are used to working with style guides and will many times provide design at little cost, if any.

In-pack/on-pack gift promotions. The gift itself can be included inside the package. In-pack gifts need to be specially promoted on the product packaging to draw attention to the offer. On-pack gifts always require special packaging, packaging equipment and potentially special handling in stores. That could add significantly to the cost of a program.

Container promotions. In some cases, the packaging itself is the gift. Jam companies sometimes sell their product in packaging that can be reused as everyday glassware. Such brands as Milo occasionally offer product packaging that is designed to be saved as collectibles. Be sure to financially budget in all tooling and design registration costs.

APPEAL AND OVERKILL
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.

Some gift promotions, such as McDonald's Happy Meals, seem destined to go on forever. But be aware that it is possible to overuse gift-with-purchase. If a program goes on too long, consumers may come to expect a free gift and become 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. Predictable schedules for a company's gift promotions may "train" consumers to time their purchases only when a promotion is on.



APPA CAN HELP

APPA (The Australasian Promotional Product Association) is the only professional trade association specifically for the promotional products and promotional marketing industry.

APPA includes the regions of Australia, New Zealand, New Caledonia, Vanuatu and Taiwan and are the top promotional product professionals in the region.

APPA members are on the cutting edge of the promotional industry due to ongoing education programs, trade shows and pricing benefits.

Allow an APPA member to get involved with marketing departments early in the process and offer what we call the "Product Perspective" to the marketing mix. If correctly utilised, this perspective can save your company thousands of dollars.

The true power of promotional products is not the product. It's the response elicited by the correct delivery of that product in a properly constructed promotional campaign.

Reach:

  • 71% of business travellers surveyed at an international airport recently reported having received a promotional product in the last 12 months.
  • Moreover, 33.7% of this group had the item on their person. The item was promoting the givers logo repeatedly to the participant and their associates.

Recall:

  • 76.1% of the respondents could recall the advertisers name on the product they have received in the last 12 months

  • In comparison, 80% of participants answered yes to reading a newspaper or magazine in the last week but only 53.5% of them could recall the name of a single advertiser.

Total Promotional Product Sales:

  • Sales in Australia: $1.56 Billion (an increase of 35% in the last 3 years)

  • Sales in New Zealand: $213 million (an increase of 30% in the last 3 years)

Copyright © 2006/Written by William Kestin (CEO APPA)
Published in Marketing Magazine August 2006


If you have any questions relating to promotional products,, please don't hesitate in contacting us. JEM Promotional Products
Phone: (02) 8205 1334
E-mail: enquiries@jempp.com.au
Website: www.jempp.com.au

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