Overview of Premiums
A premium is an item given by the manufacturer as an incentive or reward. Premiums can be consumer premiums, employee incentives, gift cards or business to business promotional products.
Advantages of Premiums
- Can be effective in achieving specific goals.
- Allow collection of names for marketing database.
- Provide brand equity support.
- Can be a motivating part of a loyalty program.
Disadvantages of Premiums
- Can be difficult to measure sales.
- May have residual inventories.
- May require special handling for inventory shortages.
- Can incur costs for damaged or defecting merchandise.
- May receive complaints from consumers who did not receive premium.
Considerations for Premiums
- A premium item should reinforce the brand's image.
- A premium offer should allow for various redemption methods.
- An item offered as a premium should be thoroughly tested (establishes liability parameters, provides inventory safeguards.)
- Marketers should be aware of a premium's exact size, weight and packaging details.
- Marketers should consider premium mailing options (determine best packaging, determine shipping method, set premium cost.)
- Marketers should consider domestic versus imported premiums. If imported, allow extra time for production and testing, dealing with customs brokers and securing lines of credit.
- A premium item should have carefully written ad copy which includes, "while supplies last," offer dates, complete item description, retail value claims, and mail-in address.
