11 min read
Dec 22, 2022
Consumer vs. Trade Promotions
Trade promotions help brands increase the product purchase rate and get ideal shelf space in-store. Typical promotions include:
- Trade allowances. Encourage retailers to stock and promote your products in exchange for a discount.
- Dealer loaders. Incentives given to a dealer to display a product, such as in-store displays, premiums, or rebates.
- Trade contests. Encourage retailers to sell products, as the retailer who sells the most wins a prize.
- In-store displays. Aisle end or center store display where retailers can show the products to customers to increase awareness.
- Training programs. Teach employees or retailers the benefits and uses of a product.
- Trade promotions. This includes an end-user sales incentive to boost retailer footfall.
Why Use Consumer Promotions?
Raise Awareness
Consumer promotions can increase interest in your brand. By using the right promotions, you can get people excited about checking out your brand.
Attract Customers
An exciting new promotion can influence consumers to try your brand for the first time. This is your chance to teach them about your products or services.
Promote New Products
Promotions are a great way to get people to try new products. Consumers are often hesitant to pick something new over something tried and tested. But by making it part of a promotion, you remove the risk factor.
Build Brand Loyalty
Rewarding your customers with special offers or sales reinforces loyalty and increases brand affinity. Creating a promotion, especially for repeat customers shows you value their business.
Boost Sales
Consumer promotions can help your brand sell a lot in a short period of time. This can be beneficial for brands that experience seasonal sales slumps.
Clear Old Stock
Got old stock kicking around? Make it the gift in your GwP promotion! Along with helping consumers feel like they got a good deal, you can make room for new and exciting products.
Examples of Consumer Promotions
There are millions of sales promotions happening every day. Let’s look at two classic examples of consumer promotions and see what lessons we can apply to our promotions today.
Probably the Best Consumer Promotion in the World
(And no, it’s not the Happy Meal, despite its $10m a day in sales.)
Good consumer promotions increase sales. Great consumer promotions build a lifetime brand affinity. And that’s what Maxwell House has done with a global audience thanks to the Maxwell House Haggadah.
Maxwell House had been advertising its coffee as kosher since the 1920s, but rivals wanted their piece of the action, too. So, in 1932, Maxwell House’s marketing agency Joseph Jacobs Advertising, pitched a new promotion: The Maxwell House Haggadah.
A Haggadah is a Jewish text that sets forth the order of the Passover Seder. At the time, Jewish American families had to purchase new and different Haggadah each year for their Passover Seder guests. Maxwell House sought to make this process easier for the growing number of American Jews interested in conducting a Passover Seder but having little familiarity with religious observance.
The Haggadah featured a simple, user-friendly English and Hebrew layout and was available easily from a local Maxwell House coffee retailer.
Maxwell House has printed over 60 million copies to date, building an unrivalled brand affinity with a global cultural touchstone. As such, Maxwell House coffee is now closely associated with Passover and has probably been the go-to coffee for 14.8 million drinkers 8 days a year for 90 years.
What can we learn?
- Understand your customer. Maxwell House wasn’t alone in promoting its coffee as kosher, but understood its audience enough to provide real value.
- Build a promotion around a need. Your promotional offer, reward, or prize should meet the needs of your customer first, then your business.
- Do something different to stand out. Maxwell House could have just bought ad space, but they took the radical step to put their name on a religious text. It took guts and it paid off.
Worst. Consumer Promotion. Ever.
Hoover holds the dubious title of Worst Promotion in History. Why? Because they failed to roll out rewards, lost millions of dollars in revenue, and took a serious hit to their reputation. How? Bad math and bad communication. Let’s break it down:
It was 1992 and Hoover wanted to boost sales during the global recession of the early 1990s. So, they offered two complimentary round-trip plane tickets to the USA to any customer purchasing at least £100 of Hoover products. The cheapest Hoover product available for purchase was £120.
Hoover predicted that most customers would spend more than £100 on a purchase, thus boosting sales. In addition, they made the application process difficult, thus deterring buyers from redeeming their offer.
They were wrong on both counts. Consumers saw this offer as 2 flights to the USA for £100 with a free vacuum cleaner.
Now let’s do the math.
- At the time, the cost of 2 round-trip tickets was £600.
- Hoover’s profit on their cheapest vacuum cleaner was £30.
- £600 of tickets - £30 of profit = a cost per customer of £570!
Roughly 300k people redeemed the offer on these terms. So rather than pay roughly £171,000,000 in prizes, they pulled the promotion and reneged on their offer. By the end of 1993, Hoover was posting £23.6m in losses on £390m in sales. All in all, a disaster.
What can we learn?
- Get your costs right. Don’t make your promotion cost more than your profit.
- Don’t make redemption difficult. It creates a bad experience and, as you can see, can still backfire.
- Brand comes first. Consumer promotions should make your brand shine, not an added extra to your giveaway or prize.
Power Your Promotions with Snipp
Consumer promotions will continue to develop and evolve as customer tastes change and new technology rises to support our marketing activity. Discover how our best-in-class consumer promotions and loyalty solutions can be the foundation of your CPG marketing to drive sales and engage your customers. Contact us to learn more.
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