Exam 8: Manufacturer and Retailer Promotions

Retailers' card-based loyalty programs do little other than keep market shares constant.

A self-liquidating premium is a giveaway and is always inexpensive merchandise.

Grocery retailer sales come from two main types of customer: store loyals who will buy from a store regardless and are not price-sensitive, and favorable store switchers who are distinctly price-sensitive.

"Must buy" items such as milk and other staples, in the case of grocery retailers, should be placed at the back of the store in order to draw customers through the aisles past other product displays.

Rounded price-endings, such as $20 or $400, suggests that the brand is higher quality.

The most common promotion by the manufacturer to retailers is a new line fee (straight cash payment to retailer or sometimes a proportion of stock donated free).

Multi-purchase premiums such as those used by children's cereals lead to increased brand loyalty.

Direct price-offs are the best way to introduce a new product category or new brand-item.

Variety and department stores should have freeform layout (asymmetric and varied displays) to encourage customers to visit departments and shop for longer.

The "double jeopardy" phenomenon, whereby the fewer number of people who buy the brand, the less frequently they buy it, is mainly caused by insufficient distribution.

Supermarkets who want people to shop for longer and spend more should play slow music, which is about rumba speed.

Bonus packs are really only suited to low-involvement products (e.g., laundry detergent).

Customer arousal levels should be kept high in unpleasant retail environments so as to offset negative affect.

Retail feature ads are the most effective retailer promotion technique.

In U.S. supermarkets, store brands account for about 40% of unit sales.

Warranties act as an immediate incentive to buy as they reduce perceived risk and are therefore best suited to generate trial of high-involvement products.

Direct price-off promotions are very successful as a manufacturer's repeat-purchase tool.

Price-off promotions usually you lose profit and therefore serve no useful purpose.

POP (point-of-purchase) displays draw customers' attention to the brand-item and always include a price-off promotion.

Home shopping, whether online or from a catalog or a direct-mail ad, is a time-saving promotion rather than a money-saving promotion.