online marketing psychology

November 8, 2010

A closer look at promotions part 1

After seeing the Burn promo girl at my local deli standing there day after day, I wondered:  does giving a free T-shirt with every 4 energy drinks really help sales?

In my opinion the Burn brand can do a lot better than that, but promotions are an essential part of the marketing mix.

Bill Wood photograph of a promotion. One year of free Kleenex if you buy a Pontiac!
photo credit: ICP
To find out more, I started digging a bit deeper into the world of promotions. This first part will cover some promotion basics and the second one will talk about various promotional effects.

Let's start with a look at some different types of promotions:
  • Price promotions: a price reduction or more product for the same price. Discounts affect your profits and might hurt your brand reputation, especially if your product always seems to be on promotion, so this type should be used with care.
  • Coupons are a different way of discounting, most of the time to a limited audience: people that bought before, people in your mailing list, readers of a certain magazine, etc. Coupons are best used for new products or for products of which sales are slowing down.
  • Gifts with purchase: these are used a lot with subscription-based products such as newspapers and consumer luxuries such as perfumes.
  • Contests: Attaching a possible reward or prize to buying a product might also be an incentive to buy the product.
  • In-store displays: not really a type of promotion. But research has shown that if products look like they are on promotion (putting a lot of product together or putting them on the corner of a supermarket aisle), people think it is on promotion and sales will increase.

To kick up stalling sales: get people to switch from a competitor or convince existing customers to buy more. A nice example of this was the Old Spice campaign. TV advertising and some nice online videos created awareness. And when people walked in the stores, promotions like discounts and coupons were waiting to convince people to buy.

Create brand awareness for new products, and get people to try it out.

Asking customer data in return for a discount can help you get a better understanding on who is buying your product. These data might be used for future campaigns.

Who does what

While less visible, in some industries promotions targeted at distribution channels like retailers, receive higher budgets than promotions directed at the final customer. The aim is to get the channels to stock product, this is called selling into the trade or forward buying. In this case a promotion is a trade off between inventory costs and the size of the discount.

Usually a product manufacturer takes the initiative for a promotion. An exception to that are the deal-of-the-week offers that you can find in many supermarkets. Those discounts are paid for by the retailers and aim to drive traffic to their stores.

Got some more info for this Promotion 101? Please add your thoughts in the comments!

1 comment:

  1. Besides all those methods of promotion,something that may be neglected carelessly is the retailing, which can be considered as invisible promotion.
    I was deeply impressed by the sales skill training by my company.Like how to react to clients' decline of the offer etc.
    And some strategy of decreasing stock: with a smartly set stock layout,salesgirl can offer the same model that client is interested in from other collection within 1 minute.=)