Mingjie Feng essay

  1. Describe how a business (including retail and service) can derive promotional and customer loyalty/retention benefit by utilizing a raffle in their marketing efforts.

Have you ever heard of an indirect pricing discrimination tactic called “bundling”? Where can you find raffle tickets bundled with your purchase? Well, if you don’t know already, they are right under the cap of your Diet Coke bottle, they are on the receipt of your McDonald purchases, and they are attached to many products we buy every day. Raffle tickets bundling is a very profitable tactic. It gives the impression that customers are getting more for what they usually paid for. For risk takers, this is even more appealing. They tend to have a habit of challenging themselves to “go big go home”. And when they win big, they want to win big even more! This is flavor of what winning a raffle is like. If you reward winning raffle tickets with more raffle tickets, you encourage a cycle of raffle ticket buyers to want to win, and thus encourage them to buy more of the products bundled with the raffle tickets.

This pricing tactic is very similar to the habit that my mom has with the Kohl’s redeemable cash reward system. Every time you spend a certain amount at Kohl’s, you get a cash reward ticket that is only usable next week. My mother is so addictive to the cash reward ticket, that she only shops at Kohl’s nowadays, and only when she gets a cash reward ticket either from a friend or from the weekly mail. I think this tactic that Kohl’s has been using on my mom, has made her a very (perhaps too) loyal of a customer to Kohl’s.

I think there is a way to synergize the pros of the raffle ticket and with the redeemable cash ticket. For example, if a customer buys a bulk case of soda for over $20. He/she gets a redeemable cash ticket and a raffle number also on that cash ticket. The raffle is entered only if he/she uses the redeemable cash ticket next week for another bulk case of soda. When the customer redeems the cash ticket, the cashier will scan the raffle ticket’s number to see if they won anything. The prize can either be more redeemable cash tickets, discount coupons, or large cash prizes.

The goal of this strategy is to make the customer feel like they are a winner every time they buy that bulk case of soda. The happy golden feeling of a winner will encourage the customer to become more and more loyal to the soda’s brand, resulting in stronger customer loyalty and higher demand for that specific soda.

As a MBA student at the University of Maryland, Robert H. Smith school of business, I have studied several marketing strategies and tactics, ranging from points reward system, to pricing discriminations (such as first class seats and economic class seats for airlines), to customer segmentations (such as Old Spice’s very manly ads), etc. I am very confident this new marketing tactic I introduced, utilizing cash reward raffle bundling, will be just as successful.

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