Strategic Thought Transformation - The IIPM Think Tank

S T R A T E G I C I N S I G H T
As mentioned earlier, there are quite a
large number of promotional schemes
prevalent at the moment. We discuss here
only a few that are very much ‘visible’ to
the common man so much so that the
consumer response towards the schemes
is easily available.
i) Collect The Points And Win Prizes:
This is a sort of patronage reward. Customers
get points for patronising some product
or regularly using some services like
airlines and hotels. The points collected
are convertible to cash or other facilities.
For example, some airlines offer free trips
on accumulating a certain number of ‘flying
hours’. Recently, Indian Airlines have
launched a ‘free Bharat darshan’ scheme
for those who buy air-tickets of a specified
value within a specified period.
This type of promotional schemes are
usually limited to small educated and elite
class of individuals who are likely to increase
their ‘consumption’ to avail of the
opportunity. Apart from this, producers
also offer such type of schemes to their
stockiest and wholesale dealers where the
points are replaced by either ‘the amount’
or ‘the volume’ of the sales during a year.
In any case, the scheme has a limited scope.
It helps in maintaining brand loyalty &
increasing the number of customers.
ii) Discount Coupons:
This is a frequently used
promotional tool. It is primarily
designed to build
repeat purchase and maintain
brand loyalty. It offers
specific reduction of price
or saving on a purchase.
The different methods of
distribution of coupons to
potential users are as defined
below. Each has its
own merits & limitations.
Through newspapers/
magazines/supplements:
Discount coupons are published
in a newspaper or a
magazine. Such a method is
more successful in creating
awareness about the product
rather than in increasing its sales. For
example, Pizza-Hut, India often advertise
their famous Pizza brand for rebate offer
like ‘cut and bring this coupon and get a
price off of Rs.10, offer valid till (a specified
date) at their selected outlets in New
Delhi’. These kinds of offers are designed
mainly for the benefits of customers in a
particular area, although, advertisements
through newspapers helps in getting attention
of various readers. This may result in
long-term benefits. In the example cited
above, nobody from outside Delhi will go
there to avail the opportunity of a discount
of Rs.10. However, it serves the purpose of
Companies are
mailing coupons
via direct mail to
those known to be
non-users or
purchasing a
competing product
increasing consumer awareness. Once an
outlet is opened in a far-off place, it will
have a lot of potential customers.
Through In/On Pack:
There are two types of coupons in this
category:
1. Enclosed in the package of a product.
For example, a washing powder
packet has discount coupons of varying
amounts for the next purchase. This
amounts to a sort of bonus for being
brand loyal for the existing customers.
For new customers it offers a competitive
price.
2. Enclosed in the package of other goods.
For example, coupons for a baby
shampoo insude a diaper packet. This
is primarily designed to attract new
customers. The choice of the target is
remarkable here, as almost all of the
diaper users are likely customers for
baby shampoo.
Direct Mail:
Companies are mailing coupons via direct
mail to those known to be non-users or
are purchasing the competing product.
The discount coupons has the following
advantages:
1. Product is never marked at a price lower
than the established one. Psychologically,
the coupons offer better opportunity
than the special prices.
2. Many coupons have expiry date that
provides a time frame to the consumer
to react and, to the producer, it provides
an opportunity to analyse the
consumer response at the end of the
time period.
3. It helps to maintain the market share
of established products.
4. It promotes new items in their introductory
stage.
The disadvantage about coupons is its
possible under-redemption that may be
intentional or accidental.
Consumers response to discount coupons
distributed through newspapers etc.
depends upon their product perception.
Quality conscious consumer may fear a possible
downslide in quality level, in view of
the implied reduction in sales. The issuance
of these coupons may be regarded as a
consequence of downward slide of the sales
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STRATEGIC INNOVATORS
An IIPM Intelligence Unit Publication