Event and in-store sampling, cause-marketing, premiums offered with a product purchase, and radio ads were among the promotional tools that had the most manufacturer support over the last year, according to a new Brand Marketing study.
In other areas, traditional couponing activity remained steady. And while more than one-third were involved in e-coupons, nearly 70% are concerned about fraudulent use of them, the study found.
The goal of the directional survey, based on telephone interviews with consumer packaged goods manufacturers, is to show trends in how manufacturers are reaching consumers through various promotional tools including couponing, Internet marketing, co-equity/account-specific marketing, sampling and premiums, and events/sponsorships.
Over half of respondents said trade promotion expenditures have remained constant over the last three years. Twenty-nine percent cited an increase in 2001 vs. 2000, while 21% noted a decrease.
Likewise, about half said their marketing budget allocated to consumer promotion has remained stable over the last three years.
However, respondents predict larger increases this year than there were last year. Forty-six percent expect expenditures allocated to consumer promotions to rise, up from 31% who said funding rose in 2000 vs. 1999.
Meanwhile, 8% reported that they expect a drop this year, down from 17% who said there was a decrease in 2000 vs. 1999.
Manufacturers seem to be relying more heavily on advertising, as 40% said they expect expenditures in this area to increase this year, up from 29% who said there was more spending in 2000 compared to 1999.
A larger amount (56%), though, said expenditures will remain the same, comparable to the 58% who said expenditures remained stable in 2000 vs. 1999.
Just 4% percent said there will be a decrease this year, down from the 13% who said there was a slip in 2000 vs. 1999.
Radio is the best advertising medium to relay brand messages, the majority of respondents said. Seventy-two percent said radio has most effectively supported their consumer promotions this year. Next came magazines (64%) and non-electronic, in-store vehicles like floor decals and at-shelf signs (64%), newspaper and Internet (both 52%), in-store electronic (44%), television/cable (40%) and outdoor (24%).
As for the costs of advertising, half indicated that television/cable will have the greatest percentage increase in spending in 2001. Following television/cable were Internet and non-electronic in-store, both at 12.5%.
Most of the consumer promotions that manufacturers ran last year were brand-specific (96%), followed by multibrand tie-ins involving different manufacturers (80%), multibrand tie-ins involving the same manufacturer (76%) and account/retailer specific (68%).
Raising unit volume is the main objective of all four types of consumer promotions: brand-specific; account/retailer specific; multibrand tie-ins, different manufacturer; and multibrand tie-ins, same manufacturer.
Overall, most manufacturers will have the same couponing activity this year as they did last year. Fifty-two percent said their couponing activity will remain the same. Another 26% said it will actually increase. The remaining 22% predict a drop.
Most manufacturers (75%) said they expect the face value of the coupons they offer this year to remain the same as they were in 2000. Another 12% said values will increase. Thirteen percent said they will decrease.
While 71% expect their coupon expiration dates to remain the same, 21% said they may shorten dates. Another 4% said dates will be lengthened, while 4% said they will be eliminated.
As they continue offering traditional coupons, manufacturers are also getting more involved in e-coupons. Over one-third (38%) provide e-coupons on their company's corporate or brand Website. Twenty-five percent, meanwhile, offer them through an independent e-coupon Web site.
Several concerns are hindering the growth of e-coupons. Along with low exposure (16%) and the time involved (5%), most manufacturers (68%) cited fraud as being the biggest concern about Internet-generated coupons.
As for other distribution techniques, all respondents said they distributed coupons through freestanding inserts/newspapers over the last year. Rounding out the distribution mix were in-/on-pack techniques (58%); store circulars (50%); electronic in-store vehicles, like kiosks and frequent-shopper clubs, (46%); direct mail (38%); with samples (38%); magazines (38%); non-electronic, in-store methods, like at-shelf coupon dispensers, (33%); and the Internet (29%).
The type of distribution tools manufacturers use largely depends on their objectives. Companies looking to stimulate product trial have seen the best results from FSI/newspaper and in-/on-pack. Meanwhile, manufacturers that want to build consumer loyalty give high ratings to FSI/newspaper, in-/on-pack and electronic in-store; build share, FSI/newspaper and electronic in-store; and build profit, FSI/newspaper and in-/on-pack.
While a majority of manufacturers (84%) use sampling as part of their consumer promotions, they are split in terms of where they conduct these efforts. Forty-six percent said in-store, while 54% said out-of-store/direct-to-consumer.
Event (95%) and in-store (90%) sampling were the vehicles most marketers used over the last year. Both were rated to be the most effective in terms of product trial, loyalty, share building and profit building. Vehicles used to a lesser degree were newspapers (19%), direct mail (14), Internet-generated (10%) and doorknob (5%).
Direct-mail, Internet-generated and newspaper samples were rated as highly effective in terms of generating trial.
Most manufacturers (62%) said they anticipate more sampling activity this year compared to last year. Thirty-eight percent estimated the same amount, while none said they will be doing less.
A sound amount of manufacturers look favorably on retailer participation in sampling events. Thirty-seven percent described retail cooperation in 2000 as being "better" than it was in 1999. Another 47%, meanwhile, said retailer participation was "the same" while 16% said "worse."
Along with the tried-and-true promotional methods, manufacturers are also experimenting more with Internet marketing.
Forty percent are communicating with consumers via the Internet by sending them e-mails with promotional offers.
Most (80%) have corporate Web sites, and 60% have both a corporate Web site and a separate site for brands and promotions. Another 8% plan to create a Web site in the next year.
Of those that have a corporate and/or brand Web site, all offer product information. About half use their Web sites for consumer sweepstakes/contests (52%) and games (48%). Manufacturers are also using their Web sites for other purposes. Among them: recipes (44%), coupons (32%), links to other manufacturers (32%), links to retailers (16%) and samples (8%).
At the same time, manufacturers are using the Web to obtain valuable consumer data. Nearly half are soliciting names, addresses, demographics and product usage via their Web sites, while 44% are soliciting product opinions and 24%, interests and product usage ideas.
Nearly all (91%) are using product packaging to get the word out about their Web site address and Web offerings. They're also promoting the sites through tags on magazine ads (61%), coupons (52%), tags on newspaper ads (35%), banner ads (30%), tags on radio commercials (30%), tags on television commercials (22%), search engine listings (22%) and checkout receipts (4%).
While 16% said they don't have concerns about Internet marketing, the remainder cited a range of issues, leading with coupon misredemption (32%). Another 28% cited "other" concerns, commenting on such issues as targeting matters and budget/allocation.
Other drawbacks cited included "too much labor" (20%), "low reach/volume" (20%), "consumer privacy issues" (20%), shipping/fulfillment (12%) and credit card fraud (8%).
Most (96%) have been involved in co-equity/account-specific marketing programs over the last year. In-store sampling/demonstrations (79%) were the most widely used programs, followed by local radio tie-ins (71%), frequent-shopper club tie-ins (54%), sweepstakes (54%), joint direct-to-consumer promos (33%) and local television tie-ins (33%).
Of these, in-store sampling/demonstrations (26%), local radio tie-ins (21%) and joint direct-to-consumer promos (21%) were said to be the most effective last year. Sixteen percent cited frequent-shopper club tie-ins, while another 16% said sweepstakes.
Sixty-eight percent of manufacturers have used premium vehicles as part of their promotional mix. Nearly all (94%) use premiums as part of a "with purchase" offer. Another 65% reported using premiums with a "multiple purchase," while 29% awarded premiums with the product itself.
Both the "with purchase" and "with multiple purchase" vehicles are highly effective in generating product trial and loyalty, manufacturers said. However, none of the vehicles were ranked highly for "share building" or "profit building."
Fifty-two percent use rebates and refunds as part of their promotional mix. Of these, over half offer these vehicles through the use of in- and on-pack vehicles, instant discounts provided through frequent shopper programs, and tear pads.
More than half (56%) said they have used promotion packaging vehicles in the last year. Of these, three-fourths used bonus packs and multipacks.
Events/sponsorships are an integral part of the promotional mix. Nearly all respondents (92%) reported using them. When running such promotions, most manufacturers (78%) choose those associated with a charity or cause. Other popular options are sports (74%) and entertainment (65%). All three were ranked "most effective" at meeting the following objectives: trial, loyalty, share building and profit building.