The Discount vs Free Gift Story
Happy Licks Food Products Ltd. has been the market leader in the health drinks market for the last 15 years. They are the owners of Happy Licks Brand of Chocolate based health drink. Sold in a dry powder form ‘Happy Licks’ can be used as an additive to whole milk or taken with plain water also.
However, the last couple of years have seen a major challenge being posed to ‘Happy Licks’ from a competing brand called ‘Complete Plan’. Although a late entrant in the market ‘Complete Plan’ has succeeded in snatching away a major chunk of market share from ‘Happy Licks’. To meet the competition from ‘Complete Plan’ Mr. John, the senior Vice-President Marketing at ‘Happy Licks’ has recently introduced a major discount scheme. The first part of the scheme offers 5% off on the purchase of a 500 gms bottle of ‘Happy Licks’ in exchange for the top foil of any other brand of health drink. This scheme, it was felt, will encourage brand switching from competing brands to ‘Happy Licks’. The second part of the scheme offers an 8% discount to retailers on the purchase of every 12 bottles of 500 gms. Shri. Chattopadhyay felt that this scheme will enable ‘Happy Licks’ to arrest the fall in its market share.
However, there has been a new cause of concern for the marketing executives of ‘Happy Licks’. That is the new promotional scheme of ‘Complete Plan’ launched as a response to the discount scheme of ‘Happy Licks’. In contrast to the discount scheme, the ‘Complete Plan’ promotional scheme is targeted towards children who are the actual users of health drinks.
The scheme offers stylish caps as free gifts With the purchase of every bottle of ‘Complete Plan’. This scheme is expected to attract children who in turn will influence their parents to purchase ‘Complete Plan’ instead of any other health drink for them.
While some marketing executives at ‘Happy Licks’ continue to sing praises for their double-edged discount scheme yet others are openly appreciative of the exact targeting of the ‘Complete Plan’ promotional scheme.
1) Evaluate the discount scheme of ‘Happy Licks’ as a push and pull strategy of sales promotion.
2) Evaluate the promotional scheme of ‘Complete Plan’.
3) Which scheme in your opinion is likely to be more successful and why?