Consumers are becoming more and more discerning and getting turned-off quicker to brands, products and services where promotions are flaky, don't add real value or are dysfunctional with the brand or products values and messages.
Don't get me wrong promotions are an important part of your marketing plan and in certain cases, depending on your strategy, an essential ingredient to improvement of your bottom line. However promotions must be part of a clearly defined strategic plan and must be meaningful in your consumers eyes.
First things first, apply the S.M.A.R.T. principles, with one other ingredient: a B for budget, to your promotional planning process. The S.M.A.R.T. principle is as follows:
M - measurable: How are you going to measure the effectiveness of the promotion against your predetermined goals? For example if your goal was to increase sales by 10% then it's easily measured after the promotion has ended.
A - attainable: Do all stakeholders (staff, suppliers, customer sample) buy into the promotion (understand it and their role?) Is the implementation path simple and the business accommodating to ensure that the promotion is a success? Too many steps or procedures ruin the enthusiasm for promotions and staff may quickly lose interest and not advertise the promotion to customers.
R - realistic: Do you have enough resources (People, budget, etc), knowledge and time to run the promotion? It's no good that you have the resources and the time but your people don't know how to run the promotion because of it's complexity, i.e. setting up the POS system to process the discount or where internal controls/procedures have to be circumvented or changed..
T - time-bound: Have you set clear start and end dates. Too little time has the result that just as customers get to know of the promotion it ends or the converse where the promotion is too long that customers lose interest.
B - budget: A key principle when considering and planning your promotions is that there is no such thing as a free (or no cost) promotion. Even if you have managed to twist your supplier arms for funds to pay for printed material and competition prizes, you would still incur costs distributing the printed material and prizes. If you are giving a discount then this is a cost (lost opportunity cost) and represents a value to the business.Although these costs may be small in comparison to the overall cost of the promotion they still need to be accounted for in a business budget.
Something else to bear in mind with promotions is that you may protect your margin where you sell an item for the usual selling price but add something to it for free to make the offer appealing (Value add.) Or you may decide that you want to increase your average shoppers basket so you might bundle items together for a special price which is lower than the normal single unit price times two. Another type of promotion to consider is that customers qualify for a large prize and/or many small prizes if certain items are purchased. There are many more types of promotions which can be matched to your promotional plans and objectives.
I would suggest the only promotion to avoid are those that involve straight discounting. It might result in a price war, with a competitor, which will not benefit either business in the short term as margin and profitability fall.
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