consumer response to gift promotions

IntroductionSales promotionTypes of Sales PromotionMonetary promotions: Price Discounts, Coupons (Utilitarian product like light bulb)Non Monetary Promotions: free gifts, free samples, sweepstakes, contests (Hedonic product like Ice Cream)Less tangible benefit of Sales promo. Entertainment, Emotional benefit for Bargain Hunters like Self perception of being Smart Shopper.

Non-Monetary Promotions• Reinforce brand equity• Difficult to influence consumer internal reference

prices.• Less likely to influence negatively brand association.

Tools of non-monetary promo• Gift: Product or Service offered free.• Premium: Relatively low price on purchase.

Objective of the Paper• Understand factors impacting consumer response

towards gift promotions.• Specifically, analysis of Four variables:• Nature of promoted product• Fit between product and the gift• Type of brand used• Consumer deal proneness

Conceptual framework and hypothesis• Use of gifts to influence purchase intention• Free gift offer effects may be limited, if consumers

perceive it as providing little or no value.• Stronger relationship with business positively affect

consumer responses to gift. • No significant effect of gift value and recipient gender.• Role of other variables like: promotional benefit levels,

affective state of consumers, price consciousness.

Nature of promoted product• Categories of products studied in sales promotion

studies:• Utilitarian • Hedonic • Benefit congruence framework

Benefit congruence framework

• Effectiveness of sales promotion depends on the similarity b/w benefits product provide and benefits promotion generate.

• Monetary promotions→ Utilitarian benefits• Non-monetary promotions →Hedonic benefits

• Monetary promotions do not → Hedonic products• Non-monetary promotions also → Utilitarian products• Gift is a gift regardless of nature of product (perception

about gift promotion with reference to product)• Purchase intentions generated by gift promotion remains

same regardless of the nature of product. (hedonic benefits while purchasing utilitarian product)

Fit between the product and the gift• High fit → Consumers respond favorably • Low fit → consumers report negative reactions

Hypothesis• Overall evaluation of gift promotions will not be

influenced by the nature of the promoted product • Consumer purchase intentions of gift promotions will

not be influenced by the nature of the promoted product

Cognitive bases for perceived fit• In brand extension:• Feature similarities• Image consistency • In cause related marketing:• Similarity of values• Consumer base

Hypothesis• Overall evaluation of gift promotions will be more

favorable when the fit b/w promoted product and gift is high

• Consumer purchase intentions of gift promotions will be more likely when the fit b/w promoted product and gift is high

Brand type• Asymmetric effect of promotion • Gift promotions for high equity brand → more favorable

respond • Gift promotions for low equity brand → less favorable

respond

Hypothesis• Overall evaluation of gift promotions will be more

favorable when the promoted brand has high brand equity

• Consumer purchase intentions of gift promotions will be more likely when the promoted brand has high brand equity.

Deal proneness• Psychological propensity to buy• Consumers responses depend on characteristics of

consumers

Categories of research in deal proneness

• 1)-Characteristics of deal prone consumer• Demographic• Psychographic• Purchasing habit variables• 2) Deal proneness is a consumer trait

Hypothesis• Overall evaluation of gift promotions will be more

favorable when deal proneness is higher. • Consumer purchase intentions of gift promotions will

be more likely when deal proneness is higher.

Methodology• 2*2*2 between subjects factorial design• (Product type: Utilitarian vs Hedonic) * (Gift type:

Utilitarian vs Hedonic)* (Brand type: High Equity vs Medium Equity)

First Pretest• First pretest include 46 undergraduate students.• List 8 frequently used products• Degree of Utilitarianism or Hedonism:• 1- (Practical Purpose/Just for fun)• 2- (Purely functional/Pure enjoyment)• 3- (For a routine need/Pure enjoyment)• Level of familiarity

• Selected Products: • Sports Shoes: Utilitarian product• Mp3 Player: Hedonic Product

Second pretest• Congruent gifts with products:• Backpack → Utilitarian gift (Shoes)• Card → Hedonic gift (Mp3)• 2 Sports shoes brand selected:• Adidas (High equity), High familiarity level, high quality• Fila (Medium equity), Med familiarity level, Med quality

• 2 Mp3 brand selected:• Sony (High equity), higher familiarity, higher quality• Hitachi (Medium equity), med familiarity, med quality

Data collection, sample and procedure• 247 undergraduate students participated• 8 questionnaires • Assess hedonic v/s utilitarian nature of product• Awareness and perceived quality of brand • Respondent's deal proneness

Discussion and Implication• Hedonist or Utilitarian character is not an important

issue in gift promotions

For overall evaluation of gift promotion:

High equity brands Gifts that fit well with product

Medium equity brand Hedonic gifts

For purchase intention:

High equity brand Strong fit b/w product and gift

Deal proneness:

Deal proneness Positively influence purchase intentions

Deal proneness Similar evaluation of gift products regardless of deal proneness

• Non-Monetary promotions more effective for building brand equity.

• Promoted products and gifts should be of same nature for more effective results.

• High degree of similarity b/w products and gifts →higher purchase intention

Limitations of research• Constrained number of products, gifts and brands• Absence of factors such as gift interest, value of the

gift and perceived benefits• Less represented sample