All marketing techniques exist for a reason. While some campaigns are suggested because they are simply a good idea, most are developed because they achieve a goal.
Hence the premium-based promotion has long held centre stage in the promotional marketer’s armoury. Giving away a free gift with a purchase, whether on pack or through a free mail-in, has been a staple of the industry for decades because it increases sales. But what happens when external factors start to put that technique under pressure?
One of the major issues with on-pack promotions is they take up extra space and require special packaging. Retailers have also started charging extra for stocking banded offers or promotions that exceed the usual pack’s space on the shelf. Combined with the extra shipping costs, it is no surprise that as little as 20 per cent of the budget for a premium-based promotion may reach the consumer in the form of a benefit. Even worse, the consumer may be losing interest in the whole technique.
“The simple fact is that there are fewer premium promotions in the traditional packaged goods marketplace than when I first came into the business 40 years ago,” says Barry Clarke, chief executive of Clarke Hooper Consulting.
He notes that in its heyday, the Sixties, on- and in-pack promotion really could shift market share and achieve trial. One reason why this type of promotion is in decline is that the consumer is now better off. “For most consumers, the general standard of affluence is such that, if they want the merchandise, they can afford to buy it,” explains Clarke.
Nick Cunningham, director of Dynamo Marketing, agrees: “The environment has definitely evolved over the years. A decade ago, the penetration of household durables was lower. Now everybody has everything. It is harder to get lifestyle-oriented things to have an impact.”
These factors are forcing promoters to become a lot smarter about their campaigns. One route is to look for tie-ins with aspirational brands that will have a strong appeal to the target consumer. Cunningham points to a campaign his agency carried out for the alcoholic drink V2, which offered a T-shirt from the hip label, Urban Stain.
The key to maintaining impact on this type of promotion is to ensure that the merchandise on offer has some quality, whether real or perceived, that will attract consumers. Despite the evident problems in the market, it is a notion which not all marketers appear to have cottoned on to.
Micky Rodrigues, managing director of DSL, the specialist sports and leisure goods premium sourcing house, reports receiving one request from a brewery for 30,000 T-shirts to be delivered in a fortnight. “The brand manager was unconcerned that the colour© would not exactly match the brand’s Pantone reference, nor that the existing neck labels would have to be removed from off-the-shelf garments and replaced with branded labels,” he says.
Rodrigues believes the “savvy consumer” of the Nineties can spot this type of makeshift promotion at 100 paces, and stays well clear.
He contrasts it with a premium, sourced by DSL, for Clark’s Cica brand. As part of a back-to-school campaign, it offered a designer-look backpack complete with a flashing light, that would retail for 14.99. Clark’s offered it for 3.99 when bought with Cica shoes, and it has been one of the brand’s most successful premiums.
David Moore, chairman of Twenty20, agrees that premium promotions are still part of the marketing portfolio. “However, the days of the conventional tea towel offer are long gone.
“The promotional product must be right, relevant to the brand and to the consumer, as it will probably be only one part of the overall communication mix,” says Moore.
He notes that some tried-and-tested premiums are still holding their own, such as NescafÃ©’s mug promotion. One benefit of economic changes is that certain high-value premiums become affordable. These days, on-pack CDs and CD-Roms are possible, even though the latter may retail at 30.
Leveraging the brand equity built up through the use of licensed film or TV characters is another way to get around consumer cynicism. Twenty20 ran a Wallace and Gromit premium promotion for Typhoo Tea which gave the brand its highest market share in six years. That is exactly the kind of behavioural shift that premiums have always intended to achieve.
But the right type of additional product and offer can also help brand owners deal with retailer resistance. Nigel Owen, director at Perspectives, says that his agency’s Kick For 1m promotion for Tetley Bitter is about to go into its second year – a highly unusual repeat of a very successful campaign. A gamecard mechanic offers instant win prizes, including limited edition Tetley’s Bitter-branded rugby shirts and tickets for the Cup Final. There is also a collector programme offering shirts and balls.
“The merchandise is really good quality. We have deliberately made sure that, if we are giving away a rugby ball, it’s a Gilbert – the top of the range. The shirts are heavy cotton and cost 35 in the shops. There is no point offering a premium which the consumer would be embarrassed to wear, because we want them to merchandise the brand,” says Owen.
Even better was the fact Asda picked up on the promotion, allowing demonstrators into key stores for several days. That gave the promotion additional exposure, as well as the on-pack flashes. As a result, Tetley’s Bitter has taken the top spot over John Smith for the first time in three years.
The importance of maintaining promotional presence in store should not be underestimated. Clarke believes that, alongside the high-tech promotion-al channels which will allow instant response, such as the Internet and interactive kiosks, “there will also be an increase in ‘high touch’ methods – presenting communications through roadshows, events and demonstrations in shopping centres”.
This sort of event-based marketing can boost the promotion and offer significant leverage to any advertising support. It also turns any merchandise which is distributed into a souvenir, rather than a simple giveaway. Consumers may be more likely to wear something received at an event they participated in. After all, that is why fans buy T-shirts at gigs – to show they were there.
The critical feature of such premiums is that they have to be carefully aligned with all aspects of the product’s marketing. “Premiums should reinforce key brand messages,” says Steve Gumbrell, marketing director at Purchasepoint. “These could be a brand’s values, personality, imagery, or iconography, and could come from a core product truth, packaging, a licensed property or an advertising execution.”
He points to successful brand premiums, such as the Tango Doll and Tango Horn, or Pepperami’s Fanimal. “Think three collectible Budweiser Frogs, or a dancing Levi’s Sta-Prest Flat Eric character – all great ways you could dramatise the brand personality,” he says. With Levi’s PR people being offered 20 for Flat Eric lapel badges which cost 20p to make, he certainly has a point.
But that still leaves the question of how to make space for on-pack premiums.
Much of the evidence suggests a flattening of uplift if consumers have to mail in for merchandise. Yet many of the items promoters would like to use are too big to fit in the packaging, or would incur retailer penalties.
Dynamo Marketing has come up with several solutions in different campaigns. Its “Thirst For It” promotion for Coca-Cola & Schweppes Beverages picked up an ISP Gold for Innovative Promotional Concept last year. The campaign used an instant win mechanism, in which cans of Coke in vending machines might contain an exclusive T-shirt. Winning cans also contained 50p so the consumer could still get a drink.
The agency achieved a 50 per cent uplift in grocery sales of Metz by offering a CD rack as part of the four-pack packaging.
The initiative also helped extend a previous promotional theme for Metz, created by Dynamo, which had involved giving away mini-CDs as part of an instant win for on-trade drinkers. The CDs were stored on the same kind of card backing used for peanuts, but with the hooded Metz man replacing the bikini-clad girl. This kind of inventive thinking can help marketers get around some of the physical barriers to offering premiums.
Leveraging brand values – either your own or third party’s – can also help dilute consumer cynicism. It can even turn merchandise from being a promotional cost into a revenue stream; look no further than Camel clothing as an example.
But it might not be enough to save certain techniques from extinction. “There will always be items of merchandise given as gifts as part of the package,” says Clarke. “But some of the staples of premium promotions, such as the self-liquidating premium – which I don’t think ever achieved much anyway – are now fading into history. Techniques have to evolve.”
And when the consumer says enough, it is time to move on.