What is a 'premium' in sales promotion, and how does it differ from a coupon?

• A. A premium is a time-limited discount; a coupon is a free item.
• B. A premium is a loyalty reward; a coupon is a gift.
• C. A premium is a price reduction at checkout; a coupon is a free item.
• D. A premium is a free item or added value with purchase; a coupon provides a price reduction at purchase.

Answer: (D)

In sales promotions, the key distinction is between added value and price reduction. A premium is something extra you receive with the purchase—like a free item or an added benefit that comes with buying the product. It boosts the perceived value of the deal beyond just paying the tagged price. A coupon, by contrast, is a price-reduction tool you use at the moment of purchase to lower what you pay, often with redemption rules. So the best description matches that a premium is a free item or added value with purchase, while a coupon provides a price reduction at purchase. For example, a cereal box might include a toy inside as a premium, whereas a coupon might give 50 cents off at checkout.