In today’s competitive environment there is one marketing weapon that has application to most all businesses. Consumers are responding to “value,” and value is what promotions convey. It was recently reported that more than 80 percent of consumers will not purchase unless an item is on sale or they have a promotional offer. These offers are incentives to purchase such as coupons, and a variety of promotional offers.
Successful businesses develop a promotions calendar with overlapping promotions 12 months a year.
There are two general categories of promotions, “open” and “closed.” An open promotion is one where the business offers an additional incentive to purchase with no specific behavior required to take advantage of the offer, such as a 40 percent off sale in a store. A closed promotion is one where an added incentive to purchase is offered to consumers, but they are required to do something in order to take advantage of the offer, such as clipping and presenting a voucher or coupon.
There are seemingly an infinite number of different promotions, with their diversity limited only by the boundaries of people’s imaginations. However, the one element common to all promotions is that they are designed to fulfill a marketing need.
This need may be to build new business, gain a greater share of existing business, keep business, or gain repeat business. Regardless of the type of promotion, its objective is to support the overall marketing effort and it should be linked to the overall plan and other marketing weapons where possible.
As with any other marketing weapon, promotions are an investment, and research is needed to be sure you’re on target. It is essential to know who your audience is — your target market. Understanding their needs and wants will help you select the most appropriate promotion. Understanding their habits, such as what they read, watch or listen to will support the selection of the best way to reach your target.
Knowing how to price your product or service to allow for large percentage discounts or strong offers will be important. Today consumers respond to the higher percent off — 30 to 60 percent — or two-for-one promotions the most.
So let’s assume you have done your homework, know your audience and how to reach your target. It is now time to decide which promotional programs to offer. There are many different promotions, however, most can be grouped according to the following types or classifications:
• Price. This is a promotion in which the incentive to purchase is based on price. The price is the main attraction and is featured prominently in the promotional message.
• Trial. This is a promotion designed to get your target to try your product or service. Price is one method that is frequently used to motivate customers to try something, sampling is yet another technique.
• Share. This is a promotion geared toward taking market share away from the competition through some form of incentive. Lower price, an upgraded product, or an advantage clearly established over the competition is the focus of the promotion.
• Introductory. This is a promotion designed to introduce a new product or service to the market. An introductory promotion may also be designed to build repeat purchases.
• Build. This is a promotion designed to build repeat business through an increase in the reward or payoff for multiple purchases. Today’s frequent fliers are forms of build promotions.
• Give-away/sweepstakes. This is a promotion geared toward getting people to buy your product or service by offering the change of a monetary award or a give-away item. Give-away item promotions are referred to as premium promotions.
• Ego/recognition. This is a promotion designed to appeal to an individual’s desire to be valued. These promotions may offer customers special recognition in the forms of upgrades, special product customizations or complimentary services.
• Tie-ins. This is a promotion of a product or service that ties into another company’s product or service. Usually a tie-in is undertaken when there is a clear benefit to both parties.
• Refunds/rebates. This is a promotion designed to provide a cash incentive (equivalent to a discount) to purchase. We see these most often used to stimulate sales or clear out items, such as with automobile rebates.
• Trade allowances (commissions/discounts). These are promotions providing a monetary incentive to the trade or intermediaries.
• Events.This is a promotion built around a specific event, such as the appearance of an entertainer, concert, designer, etc.
• Cooperative. This is a promotion similar to a tie-in in which two firms cooperatively promote a product or service for a mutual benefit. The cooperative promotion may be undertaken because of the limited budget of each firm, or because the products or services are of more value promoted together.
There are many other types of promotions or variations of the promotions listed above. Some promotions may be intended to build goodwill, others are designed as paybacks for the use of your product or service, and still others are designed to expand the awareness of your product or service into new market areas or expose new market segments to your service or product.
Remember, promotions should be supported with the perception of value. This means from how you discount to how your environment and “offer” appears. Does your establishment look good from facade to backdoor? Is your sidewalk, outside signage and front window appearance appealing? If not, make them look good.
Also, remember to take advantage of awareness and momentum created by the seasons, holidays and other natural periods in which to promote. Remember to do both external thank you (mailings, advertising, etc.) and internal promotions (tabletop offers, posters, etc.). Ask yourself if there are opportunities to cross-promote, involve the community, hold events, use your suppliers, use the local media or even work with sports figures or celebrities. Explore every possibility to increase awareness of your offers.
Finally, keep track of what worked and what did not meet your expectations. This will allow you to refine your next promotions calendar and add new offers.
Ronald A Nykiel, dean of the College of Business at Husson University, is a member of the National Association of Corporate Directors, has authored a number of books on management and marketing, counseled the President’s Commission on Executive Interchange and chaired a governor’s revenue forecasting commission.