Consumer promotions, which are also called sales promotions, “are regarded as a technique that brings about direct sales increase” (Yi & Yoo, 2011, p. 880). There are seven such techniques which are used to influence sales. They are usually used in conjunction with advertising campaigns to increase visibility (Stilley & Wakefield, 2010). This essay will briefly describe each of these, using Starbucks coffee as an example, and then will identify the most effective technique for that product.
Coupons are perhaps the most common promotion. Coupons offer price reductions or special deals for the consumer to use, either in person or online. These appeal to the budget-minded (Stilley & Wakefield, 2010). With regard to Starbucks coffee, Starbucks will often turn customer receipts into coupons. For example, if a customer purchases a coffee in the morning, the barista will stamp the back of the receipt with an image that allows the customer to buy another drink later that same day (after a certain time) for a reduced price. That receipt functions like a coupon by enabling the customer to purchase a beverage at a reduce price.
Premiums are gifts or prizes that may accompany the purchase of a good or service. Sometimes they are related to the good or service purchased, sometimes not. In the Starbucks example, their loyalty card allows cardholders to accumulate rewards that enable them to free drinks and beverages, as well as other promotions like free coffee on one’s birthday.
Contests and sweepstakes are competitions that consumers can participate in that are offered by the company. These can be as simple as winning free goods or services which may be directly related to the good or services of the company, or they maybe something larger and unrelated (like winning a free trip to Disney Land. Starbucks often offers contests on its Facebook page, where people are encouraged to like a status; from the likes of the status, a name will be randomly selected, and that person can win a Starbucks giftcard. If using the Starbucks apps, they often offer seasonal contests for free beverages.
Refunds and rebates represent repayments of sorts – it’s money (or goods or services) that is returned or represents a reduction on an amount already paid. This is another technique that appeals to the budget-minded (Stilley & Wakefield, 2010). In the case of Starbucks coffee, this often happens in stores that sell the coffee. Costco, for example, has offered instant rebates on purchases of Starbucks coffee. This essential discounts the price of the coffee, which should – as any good promotion should – encourage consumers to purchase them, thereby increasing sales.
Sampling is when the customer is allowed to partake of a good or service, in a limited way, for free. This is intended to give the customer a taste of the good or service to entice them to pursue the full experience of the good or service. At Starbucks, this translates to actually tasting: if a customer is unfamiliar with a blend of coffee or a specific type of coffee drink (like a macchiato or one of the flavored coffees), they can ask the barista for a sample to try for free to determine if they like it or not.
Bonus packs are when the customer gets extra goods or services for free. This can occur at Starbucks when they offer a larger size of coffee at the price of a smaller size. For example, you may order a venti (their largest advertised size), but they give it to you for the price of a grande (the equivalent of a medium). This may also occur when they don’t charge for additional pumps of syrup or shots of espresso in one’s coffee (which usually cost extra).
Price-offs are temporary reductions in cost that aren’t associated with coupons or rebates. At Starbucks this may occur when they are trying to get rid of product; right now, the local Starbucks is offering pumpkin spice lattes (a seasonal offering) at half-price.
I think the most effective promotion for Starbucks is their premium technique, the loyalty card. It’s easy to use – just add money to it and ago. It can be used in conjunction with the Starbucks app (available for mobile devices) which will track the rewards. One can build up rewards and get other special promotions (like free iTunes downloads and coupons) by having a loyalty card. It basically grants access to other promotions, like the ones discussed in this essay.
It’s worth mentioning that promotions can potentially affect how consumers perceive a brand (Yi & Yoo, 2011), so marketers and advertisers must be careful in their usage. Ineffective promotions can cause more damage than just not making more money; they can potentially affect a company’s image or reputation (Yi & Yoo, 2011). Promotions are strategies and must and should be deployed with careful consideration and planning.
In conclusion, there are many ways in which companies can increase (or attempt to increase) sales. Promotions provide ways in which companies can influence consumers, either by appealing to their budgets (Stilley & Wakefield, 2010) through coupons, rebates and refunds, and price-offs; their desire for fun (like contests); or their appreciation of free stuff (like premiums and sampling). Skilled marketers will know how to use these techniques effectively (Yi & Yoo, 2011); that is, they will know how to pair the product with the technique that fits it best. Furthermore, sometimes multiple techniques may work with a single product (as this essay has demonstrated). But multiple approaches to promotion allow marketers and advertisers different ways of speaking to different kinds of customers. These techniques appear to employ psychology as much as they do business savvy.
- Stilley, K., Inman, J., & Wakefield, K. (2010). Spending on the fly: Mental budgets,
promotions, and spending behavior. Journal Of Marketing, 74(3), 34-47. doi:10.1509/jmkg.74.3.34
- Yi, Y., & Yoo, J. (2011). The long-term effects of sales promotions on brand attitude across
monetary and non-monetary promotions. Psychology & Marketing, 28(9), 879-896. doi:10.1002/mar.20416