How to determine how much support of what type your promotion should get for best financial and retail results. By ShopAbility for Retail Pharmacy Magazine.
In discussing promotion in last month’s issue we talked about ‘making the punishment fit the crime’ – that is, matching the promotion mechanics to the objectives you’re trying to achieve.
Here we’re going to discuss in more detail how you can best support a promotion based on its scale, objectives and mechanics.
DETERMINE HOW MUCH TO SPEND BEFORE YOU START
What’s the promotion worth to you – what sort of Return on Investment (ROI) are you looking for?
Based on your promotion objectives, is the promotion expected to increase sales or is it a ‘cost of doing business’ based on a broader strategic objective?
This determines how much you should spend.
If your objective is to increase sales of product/brand/category X by Y% over Z timeframe, you need to figure out how many incremental dollars (revenue and gross profit) that’s worth to you.
You can then decide for every extra dollar you make on the promotion, what portion you want to spend on supporting it.
It’s a bit like sponsorship … in successful sponsorships, for every dollar spent on sponsorship naming rights, generally a further $2 or more is spent on support.
Determining your budget comes back to the scope you have set for the promotion – how many products/brands/categories it is running across and how long will it run for.
Shouting works better than whispering in retail environments – if they don’t know about it, they won’t buy it, so you need to have enough budget to shout a bit. Spend too little on support and you’re dooming your promotion to failure. Spend too much, even if on the right things, and you may get great retail KPI results on traffic, frequency etc but lose money in the process.
TYPES OF PROMOTIONAL SUPPORT
Traditionally, retail promotions are supported by one or more of the following depending on their scale/scope:
- Advertising: radio, TV, print media, online, digital eg SMS, email, social media eg Facebook and Twitter
- Point of sale: shelf ticketing, posters, header cards, counter cards etc
- Catalogues
- Displays: in-aisle, co-located with another category, gondola/aisle end displays/standees and ‘spectactulars’, additional offlocation displays (often in standees or ‘dump bins’); impulse displays at counters
- Sales staff incentives
- Mechanic oriented POS: eg scratch cards, loyalty cards
Or you might come up with something else or some additional types.
Generally, better results are achieved when support mechanisms are combined rather than expecting all of one support type to do the work.
Advertising and broad based out-of-store activities are generally designed to drive traffic to the store. Some retail objectives can be executed very successfully using instore execution only, without any out-of-store activities.
The trick here is to figure out the right balance based on a) your budget/ROI, b) your objectives, and c) scale/logistical capability based on how many stores it’s going to be in. The store and your customer database should always be your starting point (better to be instore with no outside advertising than to have out of store advertising but no instore execution). The size of the available budget and the potency of the offer will dictate how much instore vs out of store activity you do.
An example of this might look like the below (this is indicative, not exhaustive).
Figure 1: Determining support types for your promotion. © ShopAbility 2010.
EXECUTING YOUR PROMOTION
As alluded to above, certain parts of the store should be executed irrespective of promotion. A suggested model might look a bit like this, where the target’s ‘bullseye’ is where you start:
Included in ‘other areas of store’ are Dispensary Counter, Checkout Counters, co-locating the product in another category aisle, front window displays, front of store sale tables/dump bins, staff & incentives. The importance you place on each of these will depend on the product/category type and the promotion mechanic. Eg if it’s a mechanic and a product that’s suitable for impulse you might put in on the checkouts and in front of store dump bins.
The areas of the store in which you execute the promotion also tie into the RSVP3 point of purchase drivers:
Range: What products are you promoting, and with what other products?
Space & Layout: Do you need to change the space or layout of the category you are promoting in order to ‘face up’ the promoted product? Do you need to put the promoted product next to something else instore also (related category)?
Visibility & Display: How many points of visibility will you execute around the store? How many displays will you have (see ‘Other Areas of Store’, above). Note that ‘stock sells stock’ in a lot of instances. The more stock you have, the more noticeable the display/promotion is, and the bigger the brand looks. (However you don’t want to order so much stock in you’ll never move it all … you can be smart here by putting empty boxes on display). Stockweight on a display should at least equal the amount of POS (header cards, posters) on any one display. Displays shouldn’t be POS heavy or obscure the stock.
Persuasion: What’s the role of staff upsell, companion sell or incentives in persuading customers to take up the offer?
GETTING THE MESSAGE RIGHT
As a general rule, point of sale for promotions should read, from top to bottom in order:
- Incentive/offer/prize
- What the promoted product is (specifying pack sizes, if applicable)
- How (mechanic).
It needs to be kept as simple as possible, an example is below.
There needs to be a clear call to action, retail oriented (not the above-the-line advertising slapped on a poster) AND it needs to survive the ‘3 second walk past test’. Ie because the POS is going to be in environments where shoppers are moving, you need to be able to walk past it yourself and digest the message in under 3 seconds. So keep words to a minimum. (All the promotion terms and conditions can go in very small at the bottom of the poster).
Message Hierarchies using the ‘Path to Purchase’
In principle, the closer a shopper gets to the product, the more detail should be available. (Or the further away they are from the product, the simpler the message needs to be).
This means that while the message remains consistent, the level of detail on the POS changes according to where in the store they are.
The level of detail also changes according to the size of the POS. It’s no good trying to fit War & Peace on a shelf ticket, or lots of small font detail in a window poster people walk past. For example:
Externals/Windows: WIN + prize + product shot (no mechanics, just ‘see instore’)
Display signs, pallet headers, posters: WIN + prize + product shot + mechanic (T&Cs down bottom in small print)
Wobblers at shelf: WIN + prize + product shot (mechanics on back).
And as a final thought, you might be able to tie the promotion into an overarching retail occasion (Mothers Day, Fathers Day, Christmas) or a consumer occasion such as Back To School.
So that’s Promotion support. Next time we’ll take a look at the role of store staff persuasion and how different selling techniques can achieve different things.
Till then!
We welcome feedback on these articles – what you agree with, what you don’t – and what you’d like to hear about. Email us with feedback on enquiries@shop-ability.com
