FOCUS:
When to implement promotions?
What challenges face designing profitable promotions that contribute to brand equity?
What enables maximum promotion value?
We work in an industry that has generally missed the point. Let me tell you: “It really isn’t just about the premium or product.” As reaching consumers through what you might now term “traditional communication” becomes more difficult, there is a need for coordinated and compelling stories.
The difficulty with creating successful promotional marketing is not so much the lack of creative, as Hugh Macleod points out, “we were all born creative” but more so with being able to juggle multiple touch points that integrate the promotion at hand with front row marketing efforts. In a fractured communications environment, many point-of-purchase, competition and coupon promotions make no sense.
Look beyond a short term spike in sales and there is sexy sustained growth for both the brand and the partners. We take a look into the tactics on new business acquisition and retention through a promotional marketing lens. We need to go “through-the-line”, stop diluting brand equity with independent messages.
WHEN TO IMPLEMENT?
If you think it’s all about message delivery, then you’ve missed one huge point – CONTEXT!
New Product Launch
Is there a need for promotional support? Promotions are often used to strengthen product launches. This is attractive for its low risk/high incentive approach, but perhaps the need isn’t really there in the first place. How do you know? You don’t! Just look at the IPod, but asking a few questions at the beginning might help:
Defending Market Share
If you think that your differentiated stance in a market place cannot be eroded, think again. To maintain positioning and market share, we feel promotions have to link a primary benefit to the thing being promoted.
Customer Interaction and Data Acquisition
As the dynamics of the marketplace continues to streamline, direct relationships with customers become significantly important. Look to pairing promotional efforts with branded entertainment and sponsorship to create direct marketing opportunities. Effective promotional contests and giveaways minimise execution and data collection costs but most significantly provide an independent channel for customers to retain product and service information. We need to discover and embrace the power of opt-in programs in direct mail or e-mail initiatives.
Partnership Support
Don’t underestimate the value of enhancing your (retail) partner’s value proposition when designing promotions. Mulhern and Padgett - The Relationship between Retail Price Promotions and Regular Price Purchases, Journal of Marketing 59 (October 1995) suggests that “successful category leaders anticipate changing marketing conditions at their major accounts, pre-empting periods of slow sales by building buzz surrounding an inventive promotion.”
CHALLENGES TO SUCCESS
There are likely to be plenty more, but here are a few that sticks with us.
Negative Post-Promotion Sales
Without doubt, any promotion will generate some incremental volume increase. This increase may cover promotion costs during the period, but be weary of the stockpiler that is often the reason for weak post-promotion sales and profitability.
Limited Brand Value Focus
Price cannot be the only factor behind promotions. To forget the brand’s functional and emotional benefits is a deadly move that will shift customer attitudes. Final value is about creating emotional connections as much as it is a price battle. How do you differentiate when everyone is leveraging the same low price?
Integrating Message Delivery
On the flip side, communications both internal and external need to be skillfully aligned to avoid jumbled promotion messaging. Promotions misaligned with overall campaign themes discourage product interaction at the point of purchase. Above-the-line advertising saying one thing and the promotion saying something else is so not cool.
Buy-In
In consumer facing promotions, industry experts suggest that nearly half of promotion dollars allotted to retailers do not reach consumers, instead acting as a price concession for the retailer account. This seems to be backwards business in our opinion. Promotions not executed are as bad as ideas sitting in a drawer. There can be no positive marketing ROI while allocated resources remain idle rather than building brand equity.
SUCCESS
Quite simply, it comes down to one thing - Planning.
Cost-inclusive ROI Analysis
Cost-inclusive ROI analysis enables companies to test the profitability of planned promotions prior to allocating scarce resources. This type of predictive ROI analysis forces marketing teams to calculate all incremental costs required for the promotion. Outlays sitting just beneath the surface (like freight) can diminish overall profitability if left unaccounted.
Download a sample ROI ANALYSIS TABLE here…
Category Wide Perspective >
Category growth will generally grow regardless of the brand, successful promotions increase both brand equity and category volume. True market leaders create integrated promotions to influence higher purchase frequency within the category. We love this outward take on things! Successful promotions showcase a product or service attribute which consumers associate with the category generally, yet our leader implementing the campaign cleverly maintains a distinct advantage.
Marketing Partnerships
Simultaneous promotions have a complex ring to it, but it’s really simple. Find a way to sign up co-marketing agreements and a shared-cost model with another brand and both will benefit. This is a sure fire way to find growth with a customer segment that may otherwise be weak or non-existent. Creatively, there is so much more to play with.
On-Pack Promotions: Product labelling reflects associated brand discounts and giveaways.
Event Sponsorship: Companies co-sponsor branded events that raise both brand’s profile.
POS/POP Displays: Displays cross reference the co-marketed product to improve cross sell.
Execution QA: Combat non-compliance by offering strategic partners the opportunity to comment on promotion design early in the planning process, increasing buy-in.
Strategic promotions act as an additive to brand value, the leading value proposition needs to be evident as well as the one-time benefit that pulls at the heart strings of functional or emotional benefits.
