 Welcome
to the next edition of “Premium Insights.”
Instore promotion continues to grow and produce solid
ROI. As the mass media’s ability to reach consumers
continues to erode and consumers demand more value from
their purchases, value-added, instore programs have become
a more powerful sales tool.
Marketers have stepped up premium
promotions because they work. According to IRI, nearly
75% of CPG categories earned an average volume lift within
Food, Drug, and Mass channels of 50% or more through merchandising
alone. Nearly one-third of categories saw average lifts
of 100% or greater. When premiums are added to the mix,
lift can double or triple.
But premiums have expanded far beyond
short-termvolume lift. An effective premium promotion
can:
- Shape consumers’ value perceptions
of a brand and/or store;
-
Reach specific consumer segments;
-
Be tailored for customer/ account-specific
needs;
-
Drive brand and product awareness,
and
-
Increase store traffic.
We welcome the opportunity to work with
you on developing programs that you’ll be proud
of.
Nancy Rooks
Marketing Director
History
of Consumer Promotions
 In
the 1850s, the makers of Bab-O soap flakes, now Ivory
Flakes, confronted a marketing problem: how to convince
consumers to make the transition from purchasing the blocks
of soap they were accustomed to using to sampling their
flakier product?
They hit on what at the time was a novel
solution. The company began selling boxes of soap flakes
with 25-cent coupons attached to the box for discounts
off the purchase price. The coupon was enough of an incentive
for buyers to start switching to Bab-O flakes.
And thus, consumer promotions and incentive
marketing were born.
The next landmark in promotional marketing
tied America’s favorite past-time and a popular
habit-- baseball and tobacco. In 1906, the American Tobacco
Company issued artists’ renditions of baseball players
that trumpeted the names of the products on the back of
the cigarette packs. Nearly a century later, these cards
have become valuable collector’s items.
Probably the most prominent, next big value-added
consumer promotion took off in 1912 when Cracker Jack,
the popular caramel popcorn and peanut confection, launched
its “Prize in Every Box” promotion with a
little toy inserted in every box.That promotion continues
still today.
Echoing the origins of the strategy, from
the 1930s through the 1950s, laundry detergents put towels
and glasses in their boxes of detergent. Then, a new level
of sophistication was added when a wide variety of giveaway
items were conspicuously displayed in supermarkets adjacent
to or connected to the products required to buy to redeem
them. These are referred to as “near-packs”
or “on-packs” in today’s lingo.
Within about ten years, cereal makers then
began putting toys in boxes of their products and encouraged
children to ask their parents to buy the preferred brand.
The trend continued with thin slabs of bubble gum included
in packs of baseball.
The first “retailer-driven”
program began just a few years later when supermarkets
and other retailers issued S&H green stamps based
on volume purchases.
Consumers collected the stamps for redeemed
for big “prizes” at storefront redemption
centers. Thus began the first continuity strategy since
consumers were motivated to keep shopping at the retail
outlets that issued them.
The force of recurrence continues in popular
consumer promotions — McDonald’s and other
fast food restaurants are known for drawing families into
their restaurants by packaging timely and topical toys
with the children’s meals. Similarly, airline frequent
flyer programs encourage purchase frequency and brand
loyalty.
Today, the current premium and incentive
marketplace is a $28 billion industry. Clearly premium
promotions and promotional incentives have come a long
way.
Case Study: Post/Target
Driving Success for Clients, Customers
and Consumers
 BACKGROUND:
Kraft wanted to create a customer-specific program for Target
leveraging their sponsorship of NASCAR drivers that also
tied in with Post Cereals.
OBJECTIVES:
Develop a promotion that would:
- Add value for consumers without price discounting
- Target’s top sponsored NASCAR drivers
and Target corporate identifications
- Support the Post Cereal Brands equity
and cereal product usage
- Develop promotion that would encourage
sell-in from trade, thereby increasing penetration and
impact sales
CHALLENGE:
Premium needed to support the product usage, allow for collectability,
fit within specific dimensions of the packaging,be fully
compliant to food usage and withstand regular dishwashing.
SOLUTION:
The creative and marketing teams at Milmour, Kraft and J.
Brown agency decided to develop a custom cereal bowl that
would have immediate impact at POS. “Target”
Red supported the customer identity. A series of three different
bowls each featuring a different NASCAR driver were placed
in the base of three bowls. Target name was etched into
the side of the bowl for ongoing brand identification.
SUCCESS:
The promotion was a huge success and ran right at the start
of NASCAR racing season. Packaging was created to prominently
feature the product so consumers could “collect all
three”. The promotion had huge sell-in and received
end aisle placement at Target stores nationwide. The result
was a successful promotion and very strong consumer response.
Retailer Profile: Kroger
 HIGHLIGHTS:
- Headquartered in Cincinnati,Ohio
- Kroger is the nation’s #1 pure grocery
chain
- The company operates nearly 4,300 stores,
including about 2,500 supermarkets and multi-department
stores, nearly 800 convenience stores, and more than 125
supercenters.
- Kroger has diversified through acquisitions,
adding jewelry and general merchandise to its mix, but
holds #2 position for sales in the US.
- Kroger owns about 42 food processing plants
that supply its supermarkets with a growing stable of
some 8,000 private-label products.
- Private label accounts for about 25% of
its grocery sales
- Kroger is a major pharmacy operator, with
pharmacies in nearly 75% of its food stores. Prescription
sales account for close to 10% of Kroger’s sales
volume.
- About 560 of the company’s supermarkets
have fuel centers.
- Kroger has been cutting prices while improving
service and product selection, in response to intense
competition from non-traditional grocery sellers, such
as Wal-Mart Supercenters and Costco Wholesale (the #1
and #3 sellers of groceries in the U.S., respectively)
- Wal-Mart operates supercenters in more
than half of Kroger’s markets.
- Kroger is experimenting with the dollar
store concept in several of its locations
- www.kroger.com
STORE FORMATS
Kroger’s major distinction is that it operates combination,
superstore, and conventional supermarkets, supercenters,
convenience and discount warehouse stores.This affords the
company a broad swath of consumer shopping data to draw
upon and a powerful competitive advantage for information.
KEY NUMBERS
- Company Type: Public (NYSE: KR)
- 2005 Sales $56,434.0
- 1 year sales growth 4.9%
- 2005 employees 289,000
TOP COMPETITORS
- Albertson’s
- Safeway
- Wal-Mart
MARKETING POSITION
Kroger’s primary point of differentiation stems from
the fact that, of all the major supermarket chains, the
company possesses the most extensive assortment of store
formats.
CAUSE/COMMUNITY PROGRAMS
- America’s Second Harvest
- The Kroger Co. Foundation and the Ralph’s/Food
4 Less Foundation, which provide grants to charitable
organization on at the divisional level.
DISPLAYS AND SIGNAGE
All stores accept P-O-P vehicles including premium promotions,
endcaps, floorstands, shelf talkers, display bins, price
cards and window signs, although policies vary by chain.The
limitations and requirements may vary by store.
| Format |
Brand/Banner |
| Superstore/Combination |
Fred Meyer, Fry’s Marketplace and Smith’s
Multi-Department Marketplace, Kroger Marketplace |
| Conventional Supermarket |
Kroger, Ralph’s,Dillons, Smith’s, King
Soopers, Fry’s Food, QFC, City Market, Hilander,
Owen’s, Jay C Cala Foods/Bell Markets, Kessel,
Pay Less, Baker’s, Gerbes |
| Convenience |
Turkey Hill, Kwik Shop, Loaf ‘n Jug,Quick Stop,Tom
Thumb |
| Discount warehouse stores |
Brands: Food 4 Less, Foods Co. |
| Jewelry |
Fred Meyer, Littman, Barclay, Fox |
Premium Primer:
Premium: Value-added merchandise usually
offered in order to generate sales of a product without
price discounting.
NEAR-PACK:
A consumer premium item offered free or for a discounted
price with the retail purchase of another product, and
positioned near to but not touching this product at
the point of sale. The near pack shipper is a container
or receptacle used to hold and display near pack premiums. |
 |
CONTAINER PACK/PREMIUM CONTAINER:
A container for a retail product, which is reusable
after the original contents are gone and functions as
a premium. |
 |
ON-PACK:
The premium or promotional offer is attached to the
outside of a product package. |
 |
IN-PACK:
Premium is inserted into a salable package and is received
by consumer only after purchase and opening of the product.
It is usually enclosed inside a product’s package;
usually offered with a full measure of product at no
extra charge. |
 |
Seen in
the Aisles:
These are recent examples of some of our premium promotions.
Contact us for samples.
 O-Cel-O
Sponges (3M)
- Sponge Holder.Delivered flat in packaging.
Folds up with suction cup attachment
- In-Pack
- Free with purchase
- National chains
 Splenda®
(McNeil Consumer Care)
- Stirring Spoon
- On-Pack
- Free Kool-Aid packets and spoon with purchase
of 5# Splenda
- National Grocery
 Velveeta®
(Kraft Foods)
- Cheese cuber/slicer for precise recipe
usage
- On-Pack
- Free with purchase
- Wal-Mart
 Sun
Silk Shampoo® (Unilever)
- Magnetic Poetry Kit
- In-Pack
- Free with purchase
- National Grocery, wholesale, and drug
stores
About Us...
Milmour Promotions is the unsurpassed
industry leader for custom designing, creating, manufacturing
and executing premium-based promotions. Since 1956, our
award winning premium promotions have helped companies increase
sales while building brand equity. To develop a customized
premium promotion for your project or brand,we can help.
Call us at 847.324.8038 or email us info@milmour.com.
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