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“A Gift That Facinate The Relationship”

Spread awareness and drive brand recognition.

What Is A Gift With Purchase (GWP)?

A gift with purchase promotion is a popular sales tactic used to incentivize buyers by offering them a gift when they make a purchase with your brand. The gifts are often of equal or higher value to the product to increase the brand’s value.

A gift with purchase promotion is a popular sales tactic used to incentivize buyers by offering them a gift when they make a purchase with your brand. The gifts are often of equal or higher value to the product to increase the brand’s value.

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Gift with Purchase (GWP)

Benefits Of A GWP Promotion

Adds brand value

When brands offer a gift with a purchase that is of higher value to the individual product itself, they enhance the perceived worth of the brand. If you contrast this with discount promotions, GWPs are a more effective means of adding brand value. Discounts may impede the perceived worth of your product as you offer it at a discounted price, and they can also be more costly than GWP promotions.

For example: 

Wendy owns a stationery store where she sells pens, notebooks and a range of office equipment. The cost of a notebook is $5. The revenue that she generates from the retailed price of each notebook is $25.

Scenario A: Wendy offers a storewide promotion of 30% off notebooks and stationery. 

In this scenario, the 30% discount off a $25 notebook means that Wendy generates $17.50 from each notebook sale. This promotion caused Wendy to lose $7.50 compared to selling it at retail price. So including the cost of the notebook, Wendy is now at a loss of $12.50. 

Gift with Purchase (GWP)

Scenario B: Wendy offers a Gift With Purchase promotion – free pen with every notebook purchased. 

In this scenario, Wendy generates $25 from each notebook sold. The cost to produce each pen that comes with the Gift with Purchase offer is $1.50. In the end, Wendy’s total incurred cost is $6.50, and she can generate the full revenue from each notebook purchase. 

Gift with Purchase (GWP)
Increase conversion rates

Offering a gift with a purchase allows customers to feel like they are getting more value out of their purchase. This in turn increases their likelihood of converting. GWP’s are generally exclusive and limited, which also helps conversion rates as it adds urgency to customer’s purchasing decisions. When something is in limited supply or offered for a limited time, customers are more inclined to purchase out of fear of missing out on the offer.

Encourage repeat purchases

When you provide a gift with a purchase, you allow your customers to try out a product from your brand that they may not usually purchase. You expose your customers to more products within your brand, and once they like a particular product, they are more inclined to come back for more. 

Using a GWP promotion for new product launches is a great way to expose your new product to your customers and gather valuable feedback and data about the product.

Upsell

A GWP promotion is a great way to upsell your product offerings. This strategy works when you offer the gift only when the customer has spent over a certain amount. For example, you provide a GWP promotion for purchases over $50. If a customer has already spent $40, they are more likely to make another purchase to meet the threshold and receive a free product. 

Build customer loyalty

Providing customers with a gift with their purchases adds value to their purchase and creates a positive association with your brand. Survey findings from Harris Interactive indicated that nearly 90% of customers that receive a gift were “somewhat likely” to buy more frequently from an online retailer after receiving a gift. Customers are more loyal to brands that make a genuine effort to connect with them through a value-add.

When Would You Use A Gift With Purchase Promotion?

Gifts with purchases have been widely studied in psychology literature which has shown that the way that you frame your promotion can affect customers’ perceptions and behaviour. However, there are certainly times where GWP promotions are more effective than others, and that is highly dependent on your business goals. 

Gift with Purchase (GWP)

Increase repeat purchase of a specific product

“Gift” promotions have been studied against “bundle” promotions, whereby consumers can purchase multiple products at a fixed discounted price. A study conducted by Hsinhsien Liu and Hsuan-Yi Chou demonstrated that framing your promotion as a GWP can increase repeat purchases. When you offer a gift with purchase, customers perceive the focal product to be worth more and the supplementary product worth less. Once the promotion is over, customers are more likely to purchase the focal product again but less likely to purchase the supplementary product.

On the other hand, the reverse effect is seen for “bundle” promotions. The study found that customers perceive the focal product to be worth less in the bundle promotion, and therefore reported less likely to purchase the product again. However, participants reported that they are more willing to repurchase the supplementary product once the promotion is over.

Key takeaway: If you want to sell more of a specific product outside of a promotional period, a GWP promotion would be an effective way to do so. Consider the main product where you would like to increase purchases and strategically select a supplementary product to aid in its sale.

Reduce product return rate

Shinhyoung Lee and Youjae Yi conducted a study to observe how “free gift” promotions affect customers’ rate of making returns on their purchases. The cost of returning a product can have detrimental effects on a business, so it is vital to reduce the rate at which customers make product returns. The study found that customers were less likely to return a product that was promoted as a GWP compared to products purchased as a bundle. The reason behind this is that free gifts increase a customer’s sense of perceived loss. When customers return an extra item that was “free” when they purchased it, they experience a greater feeling of loss compared to when the item was offered in a bundle.

Key takeaway: Use a GWP promotion if your business goals include reducing a product return rate.

Gift with Purchase (GWP)

How To Run A Successful Gift With Purchase Promotion

As with any promotion, you want to make sure that you consider all factors to maximize your GWP promotion. If done correctly, GWP promotions can be very effective. 

Gift with Purchase (GWP)

Consider your business objectives

As mentioned, GWP promotions are most effective when you want to increase repeat purchases of a particular product or if you are looking to reduce your product return rate. As there is a cost associated with GWP promotions (i.e. you are offering products for free), it is vital that you consider your objectives while taking into consideration the associated cost of doing such a promotion. 

Consider the type of gift offered

When you decide on the gift that will be offered in the promotion, remember to pick something that is appealing to customers and will complement the focal product. The purpose of a GWP is to add value to your product and drive the purchasing incentive. A gift that does not add value to the customer can discourage them from making the purchase – even though they are receiving a product free of charge. So it is important to choose a gift that customers perceive as valuable. Offer your customers something they actually want. 

Consider how you will promote your GWP

Promotion details

One of the most important factors of your GWP promotion is ensuring that you are marketing it accurately. The instructions must be clearly and concisely written so that customers understand how they can receive the gift. Here are some key details to consider including in your GWP promotion:

  • How long is the offer valid for?
  • What do customers need to do to receive the gift?
  • Adding “while stocks last” helps with inventory management 
  • Does the offer apply only to customers living in a certain region? 
  • Is the offer only available through specific retailers? 

Awareness

You could run the most amazing promotion, but it will not be effective if no one knows about it. So it is crucial to consider how you will broadcast your GWP promotion to the public. The internet has made it increasingly easier to spread information to a large audience, so here are some online ideas to leverage in your promotional strategy:

Email campaign

Take advantage of your existing customer database and send them an email to inform them about your promotion.

Social media campaign

Many people use social media daily, so posting on Facebook, Twitter or Instagram is an effective way to reach a larger audience – especially those that are not on your email mailing list. In addition, when the promotion is enticing, customers are more inclined to repost and share it with their friends and community.

Ads

You can advertise your promotion through paid ads such as Google or Facebook ads. These platforms allow you to strategically target your audience based on various criteria, including demographics, location and specific interest categories. 

In-store

Putting up signage around your store or retailer will help increase your reach and awareness of your promotion. Advising sales staff in-stores to communicate it to customers would also be beneficial.

Consider your inventory

Making sure that you have enough inventory is vital in all GWP promotions. If you are promising customers a gift with their purchase and don’t have enough stock to give away, it will have a detrimental impact on your brand.

Examples Of GWP Promotions

Lancome: Free Gift With $45+ Lancome Purchase

Gift with purchase promotions are very popular amongst cosmetic brands. Lancome is no stranger to GWP promotions and has been doing them for decades. Their promotions always entail a similar concept whereby consumers who spend over a certain amount are eligible to receive a gift worth more than double the amount that consumers need to spend to receive the reward. In this case, when consumers spend over $45, they are eligible for a free 7-piece gift worth up to $168. 

The gift that Lancome provides includes trial versions of their products and a branded cosmetic bag. This allows Lancome to expose their consumers to a wider range of their product line and increases brand awareness with their branded cosmetic bag. When consumers use this bag, they act as brand advocates for Lancome, which allows the brand to gain some free advertising! 

Gift with Purchase (GWP)

Coca-Cola

Coca-cola has been persistently running GWP for many years. Below are some of the examples that they have put on different GWP running on different channels at different timeframe.

When you provide something of value to your customers, they are more likely to respond with further business from you.

For example, Coca-Cola FREE TOTE BAG for a minimum purchase. Their customers would definitely like to redeem as Tote Bag is one of the product that they will be using on daily basis.  Hence, it relates to the direct purchasing power by consumer.

Gift with Purchase (GWP)
Gift with Purchase (GWP)

ABBOTT

Abbott runs lots of successful GWP throughout the years. Their team thinks strategically on the products that the infant, toddler, and mother needs & provides good GWP solutions based on their consumers’ requirements. As a mother, it is always a surprise that she will definitely looking for when it’s time to replenish her dairy stocks. Putting up with practical and sustainable GWP Products keeps your consumer loyal to you.

Gift with Purchase (GWP)

Special Occasion GWP Gift

Special Occasion is definitely the GWP Project Period. To achieve the best results in your industry, make sure that your gifts is a good match to your company’s brand image. Furthermore, the gift attached is something that your consumers are searching and interested in receiving it.