BOUNTY HUNTERS

Companies have recognised that long-running promotions can erode hard-earned brand values and many are now adopting branded premiums in an effort to lift sales. But, as David Reed reports, there is no real substitute for cash

Sophisticated and ad-literate though UK consumers may be, in one important respect they remain unchanged: offer added value and they will prove to be highly promotionally-responsive.

A walk around any retail outlet or grocery multiple provides ample evidence – three for two, two for one, extra fill, banded promotions, collection schemes. A whole raft of different offers are being made with the same intention of achieving product purchase and trial.

But marketers have started to reassess their sales promotions now that they recognise continued promotional activity can erode a brand’s values.

Can sales uplift be achieved at the same time as building loyalty and enhancing brand values? That might sound like a tall order, but it is possible.

John Wood, client services director at integrated agency Turnbull Wood Hayes, says the way forward is to employ the same techniques that are used in other forms of advertising. “I believe promotions people should delve deeper into the brand and the promotional concept in order to determine what premium is required. Research such as lifestyle data should be used to glean a more holistic view of who buys the promoted brand,” he says.

The outcome of such a process might be a promotion using an unconventional premium. Wood points to McDonald’s breakfast meal campaign which gave away razors. “The premium was not a related product with similar brand values, but the promotion was well-integrated and shows how promotional thinking can successfully be spun on its head,” he says.

Given the volume of activity in this sector, it is unlikely that every promoter will change the way campaigns are put together. There is also a tremendous weight of evidence to support tried-and-tested solutions. Even these are still checked out before they are launched. “We go to focus groups or hall tests,” says Julian Lyons, managing director of promotional merchandise sourcing agency Innovative Marketing.

If exploring brand values might suggest unusual premiums, it might equally indicate that a branded premium would be wrong. “We have certainly had instances where we’ve made a proposal for a branded premium and it was felt it would be too strong and would overshadow the offer. It was too juicy,” says Lyons.

With any promotion, there is a risk that sales will only be gained from “premium hunters” – those brand-switchers who vary their purchasing patterns simply to get added-value bonuses. If the premium is of an especially high perceived value this risk is magnified. Lyons recalls that the apparent fit between a well-known magazine and Wedgwood products could not be exploited because it was felt that sales would only rise because china is highly collectible.

A useful indicator of how brand values are being sustained within promotional campaigns comes from the Institute of Sales Promotion (ISP) awards. Judged by the “great and the good” of the industry, they provide a benchmark of current marketing thinking and also effectiveness.

ISP secretary general Sue Short says: “Premiums tend to be getting quite innovative to reflect brand values.” Last year’s winners included Tango’s orange doll, which was phenomenally successful and as it was a self-liquidating premium it cost the company nothing. Tetley has also built equity around the tea folk used in its advertising by offering a range of tea-related products within a token collection scheme.

Short says: “With the biscuit barrel, the company included chocolate biscuits to go in it. That is virtually building a new brand from the premium.”

In the area where long-term promotional activity is crossing over into loyalty marketing, the question of brand values becomes even more pertinent. It is obvious that building loyalty requires offering more added value. But how can this be done without adding excess ive cost?

One solution may be partnership marketing, where the host brand and the third-party brand lend each other their equity and customer base over the long term. Such relationships are especially evident in petrol forecourt marketing, where sales promotions have turned into database-driven brand support activity.

BP’s “That’s Entertainment” is a prime example of how using a top brand as a premium can work. “Promoters can often buy cheaper, but it would be harder to buy better,” says Maggie Woodward, head of special products at Sony Music, which is supplying tapes, CDs, movies and hardware, including the Sony PlayStation to the scheme. It covers 1,400 forecourts with a three-day turnaround for delivery.

“When large clients are looking to put together a long-term loyalty scheme, they are not just looking for the right product at the right price. They want brand synergy. They need to find a brand which complements their own and adds weight to what the consumer is offered,” she says.

But Woodward warns of the risk of partnerships going “hideously wrong” if the match between host brand and premium is not exact. “Promoters often seek the sexy imagery of music products to target and excite new audiences or revitalise a flagging consumer base. Music, in such cases, can work extremely well if carefully researched and targeted. If not, the results can be disastrous,” she says.

It is this risk that brand owners offering premiums are very aware of. For the host brand, sales may suffer if the match is wrong. There might be jarring between consumers’ perceptions of the brand, built through years of advertising and sales promotion.

The owner of the brand used as a premium may suffer collateral damage over which it has very little control.

It is an issue which branded premium owners are highly conscious of. Marion McCormack, manager of EMI Records’ premium division, says: “As a record company we have a vast number of sub-brands to consider in the shape of our artists.

“Some will simply not allow their material to be used with certain brands, and it is part of our role to make our clients aware of this.”

For this reason, McCormack says: “We work with clients to make sure the project is effective and successful for both of us”. But adds: “We see ourselves as advisors rather than dictators”. Two promotions for which EMI Records provided brand-enhancing premiums were the

Häagen-Dazs “Dedicated to Pleasure” album, and “Unlaced” for Dr Martens.

Well-established brands tend to be on the receiving end of a lot of approaches from promoters keen to use them in campaigns. Marketers are especially attracted to brands that have the same qualities of fun and sexiness which they detect in their own brands.

Virgin is probably the prime example of a brand fitting this brief. “The brand stands for fun, excitement and innovation, and naturally promoters are attracted to it and look to make the most of their association with it,” says Jayne Howie, director of sales and marketing at Virgin Vouchers. “But we view potential promotions very much as a two-way street. We have turned business away in the past because we didn’t feel the brand association was right.”

Such protectiveness can extend even further. Howie says Virgin Vouchers look at how and where logos are used in order to ensure that any literature presents the brand in an “appropriate and acceptable way”. She adds: “The execution of the programme can affect an individual’s perception of a brand, so it’s important to the promoter and ourselves that the mechanics are appropriate and convey the right message.”

If all of these concerns can be dealt with, two brands can co-exist within a promotional campaign harmoniously. However, there is a further issue to be considered: burnout. The simple fact is, consumers get bored with the premiums on offer no matter how attractive they are. This is why promoters change their offers regularly, and why premium sourcing companies roam the world looking for new ideas.

Long-term links with a third-party brand could become restrictive unless a wide range of products can be used, as with Sony. Lyons points out that a mini gift catalogue may be the solution. The same mech-anism can be employed for several years, while the product range included is regularly refreshed.

There are other, less obvious advantages to employing a branded premium. Prime among them may be the opportunity to avoid the restrictions of European Commission import quotas.

“We rely on manufacturers to do that work, so it is a link out of the chain,” says Lyons.

Since branded goods are fulfilling retail sales as well as promotional redemptions, they tend to hold considerable buffer stocks. Promoters can seldom afford this, and it can be a real problem if they are unable to deliver a premium because the goods are still on a slow boat from China.

Conversely, using a branded premium may drive up the richness of the reward which has to be offered. Travel remains a strong incentive, but few consumers will be swayed by 5 off their holiday – 100 may well do the job.

The irony is, that at the same time as brands show greater willingness to lend themselves to promotions, the trend is towards no-brand, cash rewards. As Short notes, 80 per cent of current sales promotions use an instant-win mechanism. Brands may have impact, but money still talks, it seems.

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