Marketing: Custom Edition for Texas A&M University 17th Edition by William Pride,Ferrell

Exercise 19

In the cosmetics industry, sales promotions reign supreme. You manufacture and market organic skin creams, which are sold nationwide at your own "boutiques" inside various department stores. You are considering two different promotions for your newest lotion, which retails for $19.99. The fi rst is providing free samples in select stores. Each sample will cost about 45 cents per customer. After carefully examining market research, you estimate that 15,000 customers will try the free sample, with 35 percent opting to purchase the product. The second promotion is a dollar-off coupon that provides a discount on select products. The coupons would be sent to all 100,000 current customers on your mailing list at a cost of 53 cents per customer. In the past, the coupons have had a 13 percent redemption rate. Which promotion would you adopt based upon the information provided? What is some additional information that could help you in choosing the best option?