t is an advanced and legitimate means of promoting
business, when properly conducted. They assert that it is a system of
sales promotion whereby the advertising expense, plus a large
percentage of the profits of the business stimulated thereby, is
automatically returned to the dealer buyer, without increasing cost or
lowering the quality of the product so advertised; that it eliminates
advertising waste by producing a given volume of sales for a given
expenditure of money; that it reduces the cost of advertising by
prompting a continuous series of purchases at one advertising expense;
that it promotes cash payments and discourages credit business. Premium
users claim that the force of a printed advertisement is often spent in
stimulating the first purchase; while to secure a premium, the purchaser
must continue to buy the commodity carrying the premium, or trade with
the giver of the premium until merchandise of a stipulated value or
quantity has been purchased.

In general practise, the premium-giving coffee packer or wholesaler may
either offer the retailer an inducement in the form of a desirable store
fixture, household article, or item for his personal use; or he may
offer it to the consumer through the retailer.

The methods of giving the premium are numerous. To the retailer he may
give the article outright with each purchase of a stipulated quantity of
his coffee; or he may offer it as a prize to the retail distributer
selling the most coffee in a certain period in a specified territory.
Frequently the premium is of such value that the wholesaler can not give
it with any quantity of coffee a distributer can dispose of in a short
time; so he issues coupons or certificates with each purchase,
permitting the retailer to redeem the premium when he has saved the
required number. Or, the retailer may get the premium with the first
purchase by paying the difference in cash.

In giving premiums to consumers, the wholesaler follows the same general
plan used with retailers, except that in most cases the coupons are
packed with the coffee and are redeemable at the retailer's store.
Sometimes, however, the consumer sends the coupons or certificates to
the wholesaler, getting the premium direct from him. In another phase of
the premium system, the retailer works independently of the wholesaler,
buying and giving away his own premiums to promote or to hold trade for
his store. This phase is explained in the chapter on reta