Of­fer­ing Gifts, Prizes As En­tice­ment

Fiji Sun - - Business - Next Week: Fuel Pric­ing in Fiji For more in­for­ma­tion/de­tails on Fiji Com­merce Com­mis­sion and Com­merce Com­mis­sion De­cree 2010, visit our web­site on http://www.comm­comm.gov.fj or join us on our Face­book page at https://www.face­book.com/comm­comm.gov.fj

This week’s ar­ti­cle is about sales pro­mo­tion and of­fer­ing gifts and prizes. Sales pro­mo­tion is one of the as­pects of the pro­mo­tional mix. (There are other pro­mo­tional mix such as ad­ver­tis­ing, per­sonal sell­ing, di­rect mar­ket­ing and pub­lic­ity/pub­lic re­la­tions.) Me­dia and non-me­dia mar­ket­ing com­mu­ni­ca­tion are em­ployed for a pre-de­ter­mined, limited time to in­crease con­sumer de­mand, stim­u­late mar­ket de­mand or im­prove prod­uct avail­abil­ity. Of­fer­ing of gifts and prizes are a com­mon form of sales pro­mo­tion em­ployed by lo­cal busi­ness to in­crease sales and con­sumer de­mand for a good or ser­vice and is of­ten found dur­ing fes­tive sea­sons and dur­ing cer­tain pro­mo­tional sales pe­riod.

Ex­am­ples of sales pro­mo­tional of­fers in­clude con­tests, coupons, free­bies, loss lead­ers, point of pur­chase dis­plays, pre­mi­ums, prizes, prod­uct sam­ples, and re­bates. The Com­merce Com­mis­sion De­cree 2010 (CCD2010) rec­og­nizes the im­por­tance of of­fer­ing gifts and prizes in the stim­u­la­tion of con­sumer de­mand, but pro­hibits its use for de­cep­tive pur­poses.

Com­mon forms of Gifts and Prizes

Money-off ’ schemes These are schemes un­der which a man­u­fac­turer or a dis­trib­u­tor or whole­saler re­deems a mon­ey­off voucher, is­sued in his/her name, which has been ac­cepted by a re­tailer as part pay­ment for the sup­ply of goods or ser­vices.

‘Cash-back’ schemes These are schemes un­der which a man­u­fac­turer or a dis­trib­u­tor or whole­saler un­der­takes to re­fund cash to a re­tail cus­tomer on the mak­ing of spe­cific pur­chases. The cus­tomer sends a voucher back to the man­u­fac­turer (in­di­cat­ing proof of a qual­i­fy­ing pur­chase) and the man­u­fac­turer sends money to the value of the voucher di­rectly back to the cus­tomer.

Gift vouch­ers and to­kens The charge­able amount in the case of goods or ser­vices supplied in ex­change for to­kens is the amount stated on the to­ken as well, of course, as any money paid in ad­di­tion to that amount. This is the most com­mon mode used by re­tail­ers to pro­mote busi­ness in Fiji.

Vouch­ers - Cross Bor­der The ex­ist­ing spe­cial rule for vouch­ers be­ing supplied to busi­nesses for re-sale is con­fined to sup­plies of vouch­ers to busi­nesses that are es­tab­lished in the State. Cross Boarder vouch­ers re­fer to those supplied which ex­tends to other States apart from where the voucher orig­i­nated.

Vouch­ers Sold at a Dis­count In some cases, a sup­plier of goods may sell vouch­ers at a dis­count to com­pa­nies who pur­chase them to dis­trib­ute them free to their staff, or to re­sell to the pub­lic. The sup­plier un­der­takes to ac­cept a voucher in full or part pay­ment of goods pur­chased by a cus­tomer who was not the buyer of the voucher.

Re­place­ment goods Re­place­ment goods supplied free of charge are some­times used as war­ranties or guar­an­tees on the orig­i­nal goods.

In con­sumer the­ory, sub­sti­tute goods or sub­sti­tutes are prod­ucts that a con­sumer per­ceives as sim­i­lar or com­pa­ra­ble, so that hav­ing more of one prod­uct makes them de­sire less of the other prod­uct. There is cer­tain con­di­tion to which this method of re­place­ment is ap­plied.

How is of­fer­ing of gifts and prizes be­come a con­cern to the Com­mis­sion?

Nor­mally we have found that these gifts and prizes are not avail­able by the re­tailer. Other lower value gifts and prizes are of­fered to cus­tomers’ com­plaints re­ceived by the Com­mis­sion in re­gards to gifts and prizes that are of­fered to cus­tomers by busi­ness. In or­der to safe guard the con­sumers FCC has a Sec­tion on of­fer­ing of gifts and prizes to con­sumers

Sec­tion 85 clearly states –

A per­son shall not, in trade or com­merce, in con­nec­tion with the sup­ply or pos­si­ble sup­ply of goods or ser­vices or in con­nec­tion with the pro­mo­tion by any means of the sup­ply or use of goods or ser­vices, of­fer gifts, prizes or other free items and does not pro­vide them as of­fered shall be guilty of an of­fence.

It im­plies that busi­nesses are free to of­fer gifts and prizes in their pro­mo­tions, but so long as they are ac­tu­ally avail­able to cus­tomers in the terms and con­di­tions be­ing promised. Any­thing less than that promised and which ad­versely in­flu­enced to the cus­tomer’s choice would be deemed a breach of this pro­vi­sion.

Of­fer­ing gifts and prizes has be­come a com­mon sight in to­day’s pro­mo­tions for goods and ser­vices, par­tic­u­larly dur­ing fes­tive sea­sons and pro­mo­tional sales.

It adds at­trac­tions and ap­peal to goods and ser­vices in de­mand for such events and con­sumer’s choice can be greatly in­flu­enced as a re­sult. Whilst it is en­cour­aged and is recog­nised as an im­por­tant trade in­no­va­tion, us­ing it for de­cep­tive pur­poses is strictly pro­hib­ited un­der the CCD2010.

Of­fer­ing such gifts and prizes as an en­tice­ment for cus­tomers with the in­ten­tion of not pro­vid­ing them amounts to an of­fence and the Com­mis­sion can take le­gal ac­tion against those in breach.

As such, it is im­por­tant for busi­nesses to trade with fair­ness and be ac­count­able to their cus­tomers. For com­pli­ance to this re­quire­ment is not only ben­e­fi­cial to busi­ness but is also en­dur­ing. Fur­ther­more mar­kets run best when both buyer and seller have equal ac­cess to in­for­ma­tion so that ev­ery con­sumer can par­tic­i­pate to take ad­van­tage as well as for busi­ness. Thus con­sumer is­sues for un­fair trad­ing prac­tices and an­ti­com­pet­i­tive trader con­ducts should be prop­erly ad­dressed in terms of of­fer­ing of gifts and prizes.

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