Does your Promotion marketing involve switching between discounts? Is it the right choice for your business?
In this article we look at how to construct a corporate marketing promotion, why companies decide to apply special offers and discounts, and what the potential pitfalls are for consumers.
Marketing promotion: main factors
“Promotional strategies are based on 3 main factors:
- The economic benefit for the customer: e.g. you can buy our chair at a 30% discount;
- The expiration of the promo, i.e., a time limitation: e.g., you can purchase our chair with a 30% discount by February 28;
- The principle of scarcity: e.g. you can buy our chair at a 30% discount by February 28.
Promo valid for the first 100 customers.
These levers are able to push the customer to buy and quickly decide to make the purchase.
There may be an even more restrictive fourth aspect, which is to address only a specific target audience.
What drives companies to make offers, discounts and promotions?
“Behind a promotion, there must be a goal on the part of the company. These goals can be different. I mention a few.
Attracting new customers
In this case, a promo is done that offers discounts and promotions to attract new customers.
The most striking examples are in the mobile phone industry, where a special rate is often offered to those who switch carriers.
In this case, it is also a way to erode the market of competitors.
Emptying warehouses
Surplus inventory is an economic and logistical problem for companies, and some promos are aimed precisely at selling as many products as possible.
A typical case is“buy two products, the third is free.” On average, it should correspond to a 33% discount.
If the customer simply had a percentage discount on purchases, he or she would probably still buy only one product at a discount and not three.
Converting leads into customers
Free trials are a must to achieve this goal.
Gyms make them, but so do various software and online services.
In this case even often a period of free use is offered , with no strings attached to purchase.
It means that the company is so confident in the effectiveness of its service that it estimates that a high number of subscribers will convert into paying customers.
Testing a new product or service
When there are services or products being launched, a company promo can be used to attract as many users as possible and get their feedback.”
Marketing and promotion: Are there pitfalls for consumers?
“Very often promos are structured with an insidious communication style. For the consumer to fully understand the actual benefit, he or she has to think it through.
Again, I give examples.
- Corporate promos reserved for new customers actually penalize regular customers who have put their trust in a company for years and find themselves paying higher rates than new customers;
- Promotions such as“Buy one product and on the second you get 50 percent off,” on the other hand, give an effective 25 percent discount on two products (if of equal price);
- Multiple discounts such as 40% + 20% promos. In the customer’s head the discount is 60%. In reality the benefit is less since a 40% discount is applied to the full price plus an additional 20% on the discounted price.
According to my personal idea of marketing ethics, promos should always be crystal clear to customers.”
Are promotion strategies good for a Company’s Business?
“It depends on the strategy we have defined and the economic impact (promos and discounts) it can have on the company’s business.
Almost all types of marketing promotion aim to increase sales or attract new customers.
From this point of view, promotions, special offers and discounts can prove useful.
Much, however, depends on the industry in which the company operates, who itspotential customers are, and its market positioning.
A well-known sofa brand has made promos its hallmark.
The old infomercials enshrined mattress and cookware brands that for years went on through the mechanisms of promos.
If other companies were to adopt this kind of approach, the customer might, in contrast, have a negative impression.
We are thinking especially of sensitive sectors such as finance, banking, and health care.
The choice of using corporate promo as a marketing tool also falls within the construction of brand identity.
Types of marketing promotion: black Friday
The most curious thing is that, on these very new Marketing opportunities, we see a disorganized and uneven welter of communication models.
The only ones who are perfectly organized are the large Companies that are used to offer, on this occasion, remarkable and exceptional promotions in order to increase the value their sales.
In most cases, the confusion, is the result of a last-minute decision: “I saw that Amazon is doing Black Friday, I want to do it too.”
Some apply the discount only today Friday, November 29.
Others, have extended the “Black Friday” period, to a larger number of days.
In some cases changing the name to Black Week, Black 10 etc..
Sales promotion marketing: 12 basic questions
If we want to prepare a proper Marketing and Communication strategy, we should ask ourselves some questions:
- What is the goal I want to achieve? If the question is not crystal clear, then you can answer one of these:
- Do I want to earn more money?
- Do I want to sell more?
- Do I want to get new customers?
- Who is my Black Friday dedicated to? This question is also not trivial because you might adopt a different strategy for Loyalty Customers and New Customers.
- Do I offer the same promotions to both loyal and new customers?
- What can I do to make Black Friday a special time for my loyal customers?
- How much am I willing to invest to achieve a super Black Friday?
- What is the strategy?
- What is the benefit to the user other than savings?
- Is it better to focus on “Super Discounts” or a better shopping experience?
- Is it better to make Black Friday last 1 day or 3/5/10 days?
- Can Black Friday be an opportunity to take advantage of at a later date?
- Does anything happen after Black Friday?
- Above all. What is the real benefit for my company to “sell out” its products.
Black Friday should not just be Black Friday.
For example, in the states it is usually followed by Cyber Monday, the first Monday after.
Cyber Monday is characterized by large discounts related to electronics products.
In essence, Cyber Monday represents e-commerce’s answer to Black Friday and is characterized by a massive discount offer, exclusively online.
Black Friday promotion strategies. Pamper Your Customer
Whether it’s a Monday, or a Lion Friday, if your goal is to increase your company’s visibility and business, my advice is to study a marketing and communication campaign comprehensive and articulated that takes into account, first and foremost, the user experience.
If we fill stores with hysterical customers who want to take advantage of the offer at all costs and their experience is negative (lines, unavailable products, stress) we have, unfortunately, generated a negative flywheel.
In my opinion if we design the right Marketing and Communication Strategy, Black Friday can be a great business opportunity in the medium to long term.
For example, I am not concerned with generating cash immediately, but with acquiring potential customers to pamper over time.
Promotion strategies. What are the real business benefits for your Company?
In recent years, Black Friday has quickly caught on in Italy as well, becoming a useful opportunity to shop while saving money.
More and more Italians are deciding to prepare for Christmas gifts as early as November.
If the benefits in terms of savings are obvious for a consumer, what are the benefits for businesses?
Let us refer to a real, practical case.
Think, for example, of the number of active gyms in any medium-sized Italian town.
Suppose an average of at least 6 gyms per city decide to join the well-known Black Friday, offering sensational promotions and discounts on their classes/services/subscriptions.
This, of course, causes people to choose the gym that offers the best discount, at that precise moment.
A purely economic choice, focused certainly not on quality but on savings.
What determines this?
That in order to attract new members, different gyms will make increasingly sensational promotions. Result? Drastically reduced margins.
We can say that the formula adopted for gyms, is by no means a differentiator.
Black Friday, if handled improperly, can generate more harm than good…
We report, below, an example of a poorly managed Black Friday sales forecast.
We anticipate the explanation with an explanatory graph showing an assumed sales performance during the Black Friday period, of a typical company, active in the retail sector.
The graph shows, in light blue, the average sales trend, broken down into weeks and days.
As shown in the graph, thanks to discounts and promotions, on Black Friday, we see a surge in sales (yellow bar).
Although this increase is large, many times, it does not compensate for the drop in sales on the days before and after the well-known Black Friday (red band).
Not only that.
One of the most important elements to take into account is the marginality on the product and service delivered, which, during Black Friday tends to shrink significantly due to promotions and extra costs.
Are we sure it is worth it?
Negative effects of improperly set promotion strategies
N.B. You may earn much less: shrinking margins
Everyone focuses on making purchases only on Friday.
This can generate a drop in sales in the preceding and following days, resulting in blocked sales and a drastic drop in margins.
Not only that.
On the day of Black Friday, you are most likely forced to increase staff to handle the high and concentrated flow of customers by spending more energy, time and…money!
You risk providing poor customer service and losing loyal customers
On Black Friday day everyone is more agitated and neurotic.
On the one hand, merchants are forced into incredible tour de force to meet the multiple demands.
On the other hand, customers are forced into long queues and many times, cannot be attended to carefully.
This results in poor customer service.
It may seem counter intuitive but the customer expects top service, always!
Regardless of whether he bought it at a mega discount, on Black Friday, or at a bargain price on Groupon.
Not only that.
Black Friday is known to attract a lot of new Customers to the store.
Mismanaged Black Friday discontent could affect loyal customers. Those who have been coming to your store for years.
The hustle and bustle of responding to the demands of so many possible new customers could undermine the excellent relationship with real, loyal customers. The ones who come into your store every month.
Why risk losing a loyal customer to one you will probably only see on Black Friday?
How to build a marketing promotion
In my experience, a promotion can only be effective if it pursues a specific goal (such as those we have mentioned), which in turn is one more step toward the goals of the actual marketing strategy.
The first thing to do, therefore, is always to build a marketing and communication strategy based on the company’s market positioning, its values, its mission, and above all, taking into account the niche of people it targets.
At this point of can start a company promo or build an ad hoc strategy, choosing the right promotion channels (company sites, social networks, etc.) where we are most likely to meet users in line with our target audience.”
Happy Black Friday to all 😜
Did you find this article interesting? You can explore further by reading these articles.
- Andrew Barbershop. Emblematic example of customer experience
- Do you have a gym? Do you want to acquire lots of new Clients?
- Customer Experience, my shopping experience
- Gift one thing to raise the question of another
- Marketing strategies to build customer loyalty
- Your Marketing Consultant is your best ally
- Pricing strategies: how they can make a difference