A few days ago, I picked up a bar of Snickers served at a friend’s party. It was a normal bar of chocolate with the usual branding, but what caught my eye was the unusual promotion on the package. You could get Rs 20 cash in your Paytm account by entering a code given inside the wrapper; the candy bar costs Rs 40. Not a bad deal at all. But is this the best way Snickers marketers can sell the candy?
Promotions are a common strategy marketers of consumer goods and services use to attract customers. We all avail of hefty discounts in the festive seasons, buy-one-get-one-free offers, cashbacks on credit cards and digital transactions, lotteries where you could win anything from a car to World Cup match tickets. Even educational institutions these days offer free laptops and world tours in return for enrolling in them! Promotions are intended to boost sales, introduce new products and partnerships, foster loyalty and a lot more.
The real catch is to figure out how your brand is perceived, and offer a promotion that is congruent with it
But what is the best promotion for your brand?
Marketing researchers classify non-advertising promotions into monetary (discounts and cashbacks) and non-monetary categories (free gifts, buy-one-get-one-free offers), and further into risky (a lottery for a fabulously large reward like a holiday to Australia with a bottle of Coke) or sure gifts (a free Coke with your order of burgers and fries). However, the real catch is to figure out how your brand is perceived, and offer a promotion that is congruent with it. Confused? Let us dig deeper.
As we have discussed in this column earlier, goods and services can have a utilitarian and a hedonic component. For example, you may be pleased by the aesthetics of the sleek new MacBook, but it also has a utilitarian benefit — it helps you program, write documents and send emails. Comparatively, a Dell laptop may be more utilitarian in nature, with its benefits coming largely from it enabling you to work properly, rather than any design aspects. Some products are far more stark in their perception. For example, you are unlikely to perceive utilitarian benefits while going out for a very expensive meal at a Michelin-starred restaurant, or any hedonic benefits in buying a pen drive.
Now, research by Pierre Chandon, Brian Wansink and Gilles Laurent
suggests that sales promotions too have their specific perceptions. For example, lotteries are perceived to have high hedonic but low utilitarian benefits, while price reductions and rebates are seen to have relatively high perceived utilitarian benefits without much hedonic value. They further demonstrated that consumers prefer hedonic promotions with hedonic goods and utilitarian promotions with utilitarian goods. In other words, you are better off gifting lotteries for vacations if you run a spa, while if you are a seller of toilet paper or toothpaste, you may just want to give a small discount.
Research shows that consumers prefer hedonic promotions with hedonic goods and utilitarian promotions with utilitarian goods
So, coming back to the Snickers and Paytm example, was that a good promotion for Snickers? One cannot say for sure without further analysis. It depends on how the Snickers brand is perceived. Does it serve the purpose of addressing hunger, or does it distinguish itself with a superior taste?
As a consumer, I would say it’s a mix of both — Snickers is clearly not a fine bar of Lindt, but definitely a little more high-end than say a Munch or a Perk bar, at least to the average Indian consumer. The next step would be to evaluate how the Rs 20 rupees Paytm cashback is perceived. Is it hedonic, or utilitarian? What is the target customer going to do with the extra Rs 20?
Use it for cab fare or a mobile recharge or to order something to eat? Only a data collection exercise can reveal this. However, if the two turn out to be perceived similarly, the promo is more likely to work than otherwise. So remember, if you are selling toilet disinfectant, offering the chance to win a fancy spa visit as a promotion may not be the greatest idea!
This column is intended to showcase interesting academic research in marketing. The technically oriented reader is encouraged to read the original research articles cited in the column.
Prithwiraj Mukherjee is Assistant Professor of Marketing, IIM Bangalore. Views are personal.
Lead visual: Angela Anthony Pereira