Front-loaded and Rear-loaded incentives in marketing

In marketing, there are different types of promotions that are provided to consumers and trade partners. Broadly, they are divided into two categories: front-loaded promotions and rear-loaded promotions.For example, when using price packs, direct mail coupons, FSI coupons or peel-off coupons, consumers obtain an immediate benefit upon purchase or a front-loaded incentive. However, when buying products with in-pack coupons or products  affiliated with loyalty programs, promotion incentives are obtained on the next purchase occasion or later, i.e., a rear-loaded incentive.

The decision of whether to go for a front-loaded incentive or a rear-loaded incentive is dependent on the innate choice process of  consumers in a market  (variety-seeking  or  inertia). While in both variety-seeking and inertial markets, the  sales impact  and the  sales on  discount are higher  for  front-loaded  promotions than  for rear-loaded  promotions,  from  a  profitability  perspective,  rear-loaded  promotions  may  be better than front-loaded promotions. Research has shown that in markets with high variety-seeking it is more profitable for a firm to rear-load, and in markets with high inertia it is more profitable to front-load.

 

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2 thoughts on “Front-loaded and Rear-loaded incentives in marketing

    • Within FMCG:
      Variety seeking categories – Toothpaste, Biscuits, Breakfast Cereals. People want to try variety here.
      High Inertia Markets – Sanitary Napkins, Skin Creams, etc. People don’t want to change this once they fix onto a brand.

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