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No. 6046

Promotional Tie-Ins, Partnerships, and Cross-Ruffs

Tie-in promotions, which use the brand equity of one product to generate sales of another, offer manufacturers an opportunity to add value to their products rather than devalue them through discounting.

T A B L E     O F     C O N T E N T S

OVERVIEW

Packaged goods tie-ins are a promotional tactic that allows two products to leverage each other's brand equity in order to gain attention, obtain more shelf facings, create in-store awareness, build sales, and penetrate new markets. This is often executed by means of an in-pack or on-pack coupon for the higher-profile branded product, though it might also involve multiple brands. The idea is to put two compatible products together to reach a similar target audience. Tie-ins are a common packaged goods promotion, particularly in food and beverages, but they are also being used increasingly in consumer electronics, apparel, entertainment products, and even among private labels.

WHY USE TIE-INS?

The main reason for using tie-ins is to target specific audiences at the point of purchase (and remember, that's where two out of three purchase decisions are made). Products using tie-in promotions attempt to leverage the brand equity of their partner. Sometimes it's a smaller company that wants to leverage the bigger name of a higher-profile partner, but often it's two large companies of equal standing. Product tie-ins also create opportunities for cross-merchandising at the retail level, often giving the product more facings and more visibility in the store.

Tie-ins are often a good way to reach a target audience that a product otherwise might not be able to reach, such as a special demographic or psychographic segment of the market. By riding along with another product, a product can gain access to a new group of potential customers.

Cost efficiencies usually accompany tie-ins, thanks to joint promotions, advertising, public relations (PR), point-of-purchase costs, and prize contributions. Although the budget may be larger than previous solo efforts, the partnership ideally will have a bigger impact than the sum of its parts.

Packaged goods tie-ins represent a value-added bonus to the consumer, are a good way to reward loyal customers, and attract new users. In particular, this type of promotion is a great way for the "host brand," or carrier company, to be more competitive without discounting the price. Instead of undercutting your brand image by price discounting, you grab the consumer's attention with an on-pack message that says, "Save $5," which suggests added value.

TYPES OF TIE-INS

Tie-ins come in a variety of shapes and sizes. The most common are:

Brand-to-brand tie-ins involve promotions that leverage one brand with another; for example, a gourmet mustard with a brand of packaged deli-meats. They are probably most effective when the primary goal of the program is to hit a target audience with minimum waste.

Multibrand tie-ins, either on-pack or in-pack, may involve up to 20 or 30 tie-in partners for a single purchase. This is a great way to add tremendous value and significant impact at the point of purchase.

Coupon and sampling programs. Sampling programs usually involve tie-ins with organizations or events that can deliver a clearly defined target audience. Goodwill Industries, for instance, distributes samples and discount coupons as a way of thanking donors. Other examples: reaching college students through campus bookstores or active adults through health clubs.

WHAT TO LOOK FOR IN A TIE-IN PARTNERSHIP

Partnership should be the key word in any tie-in promotion. To ensure that the partnership offers a substantial benefit to each of the partners, companies need to understand their partners' marketing and promotional goals as well as their own. After that, they can put together a plan that encompasses the best interests of both parties. What should you look for in a tie-in partnership? Here are some guidelines:

  1. Avoid conflict of interest. For example, Pepsi-Cola, whose parent company also owns Kentucky Fried Chicken, Pizza Hut, and others, wouldn't likely do a promotion with another fast food chain.

  2. Have common promotional goals with your partner. If one partner wants to promote to the trade but the other wants to emphasize consumer traffic, there's going to be conflict--and your results will reflect it.

  3. Parity in product quality and positioning are essential for you and your partner. For example, Porsche is not likely to do a tie-in promotion with a cubic zirconia diamond, which is positioned as a downscale product. A more likely partner would be DeBeers.

  4. Common target audience. That's what most tie-in promotions are seeking to reach in the first place. If your partner is going to act as an incentive, make sure you want to talk to people with the same demographic or psychographic characteristics.

  5. Similar purchase cycles and seasonality. Some clients have great brand names and brand awareness, but they have slow purchase cycles. Tabasco Sauce, for example, has a purchase cycle of about one year. As a result, it doesn't make a good promotional partner, because people are not often in the store looking for it. Seasonality is a separate issue. Some companies do 50 percent or more of their business during a certain part of the year, and, if your product doesn't have a similar time frame, that can be a problem. Suncare products are a good example. They are typically purchased in the spring, and they don't work well as partners for promotions at other times of the year, even in the summer.

  6. Common distribution channels. If you are not distributed in the same retail channels as your partner, your promotion will probably lose a significant portion of its impact. In fact, some retailers will not even allow you to promote a product that they don't normally carry. The retailer is king and controls shelf space carefully.

  7. Lead time and cost should be compatible. Even for the simplest tie-in promotions, you've got to print packages with your tie-in offer, get them into distribution, and put them in place. Some people (and products) work on short lead times, but others need long lead times to make things happen.

  8. Integrate the tie-in with other forms of promotion. It's one thing to slap your tie-in on a package, but it's another to integrate it with your advertising, trade promotion, and PR. That will amplify the effect.

EVALUATE YOUR RESULTS

The final step with any promotion should be to record your results and evaluate them. That way, you can compare the numbers with previous promotional efforts and use them as a benchmark for future tie-ins. Obviously, your evaluation should be based on what your promotional goals were in the first place, but be sure to look at all of the ramifications. There are many goals that can be sought in an on-pack tie-in promotion (example: getting trade leverage, features, and displays, along with more facings and the potential for cross-merchandising). All such factors can help you sell more of your product as a result of the tie-in.

Above all, don't fall into the trap of neglecting other goals by putting too great an emphasis on coupon redemption rates. Although redemption rates are an obvious benchmark, they are not necessarily an accurate measure of a tie-in program's success. They generally will be higher than for direct mail or free-standing inserts (FSIs) in newspapers, but they can vary greatly, depending on the type of product or the category. Also, products with shorter purchase cycles usually have higher redemption rates than those with longer purchase cycles. Every product is different. That's why it is important to keep a record of your promotional efforts and the results.

SHOULD YOU WORK WITH A PROFESSIONAL?

A successful tie-in promotion takes an enormous amount of time and attention, which are both scarce in the corporate environment. It takes experience, expertise, creativity, and a tremendous database of research on potential tie-in partners. There are also a lot of contingencies that an outside promotion company specializing in sourcing tie-in partners is better equipped to handle. These range from knowing who will not work with liquor or tobacco and where there might be a conflict of interest, to who has distribution in certain trade channels and who is looking for a springtime promotion. Most often, you have to contact multiple potential partners to find a good match, so it probably will be less costly and more effective to use an outside professional promotion tie-in agency. Such a company also can:

  • help generate creative concept ideas based on your promotional goals;
  • help develop and implement program elements, including negotiating with tie-in partners;
  • select and design the best delivery option for your offer.

What should you look for in an outside agency? The key factor is experience. Do the people have experience in tie-ins, particularly of the type that you want to pursue? Find out what other companies the agency has worked with, and call those companies to see what results they've had. Ask the agency how its fees are structured. Finally, look for integrity.

COST OF A TIE-IN PROMOTION

Costs for a tie-in promotion can vary widely, depending on the products involved, the quantity, and the scope of the promotion (whether it is national, regional, or focused on a specific distribution outlet). Companies can spend $100,000 or more on a tie-in promotion, but the typical effort falls in the $5,000-$25,000 range.

CASE HISTORIES

Aiwa, a consumer electronics company, promoted its bookshelf stereo systems with a tie-in offer with Time-Warner and 30 other partners. An enhanced CD-ROM that included six songs licensed from Time-Warner could be played on the stereo, and 30 discount coupons for a variety of youth-oriented products could be downloaded by computer. Purchasers buying the system got $100 worth of coupons.

Arctic Zone, a leading manufacturer of soft-sided lunch boxes targeted at kids aged 6 to 11, has a seasonal back-to-school tie-in program that integrates some 25 coupons and samples for such things as jelly beans and granola bars. CO-OP PROMOTIONS, which helped develop the program, promotes it to potential partners as a way to test a product targeted to young children.

FIND A SUPPLIER

To find a supplier, go to #9520, Supplier Finder.

ASSOCIATIONS

Promotion Marketing Association (PMA) is the principal association for companies that use packaged goods tie-ins. Its member companies deal mainly in promotion services, sales incentives, and premium merchandise. PMA sponsors seminars and conventions, provides information about legal services, and publishes two newsletters and a membership directory. Call 212-420-1100; fax 212-533-7622; go to http://www.pmalink.org/.

TRADE SHOWS

For a list of Industry Events, go to #9510, Calendar of Industry Events.

BOOKS

The following titles look at promotion marketing in general, and each includes some material on packaged goods tie-ins:

Sales Promotion Essentials, by Don E. Schultz, William A. Robinson, and Lisa A. Petrison, provides the basics on how to use ten major sales promotion techniques. 196 pp. NTC Business Books. $19.95; through Amazon.com, $15.96.

Dartnell Sales Promotion Handbook, edited by Tamara Brezen Block and William A. Robinson, is a good reference book for anyone in the business. It details all aspects of the sales promotion industry, including sampling, couponing, promotion fulfillment, licensing, and point-of-purchase advertising. 910 pp. Dartnell Corp. $29.95 (paper); from Amazon.com, $23.96.

PUBLICATIONS

Promo, monthly, is designed for people who make promotion marketing a regular part of their jobs. There's a heavy packaged-goods emphasis but also coverage of other industries. $65/yr. Call 203-358-4351 or 800-463-4054; go to http://www.mediacentral.com/promo.

Advertising Age, weekly. Although the focus is on advertising, the magazine includes news and regular columns about promotion marketing. $109/yr. Call 212-210-0100 for information, 800-678-9595 for subscriptions; go to http://www.adage.com.

Brandweek, weekly, bills itself as the publication of brand management, covering promotion marketing from the perspective of product managers. It reports on what the big marketers are up to and puts a lot of emphasis on new media technologies. $130/yr. Call 800-722-6658; go to http://www.brandweek.com/.

ONLINE SERVICES

Adweek/Brandweek/Mediaweek. All three publications can be accessed at this site. Subscribe here, search the Articles archive for all articles published since 1991, and download articles for a fee. Go to http://www.adweek.com/.

RELATED SMN ARTICLES

For information related to packaged goods tie-ins, click on #1022, Sampling Strategies; #3030, Promotion Law; #6030, Coupons and Rebates; #6036, Gift with Purchase; and #6040, Entertainment Tie-ins.