Promotional programs yes, but never without the "4 P's" of marketing

We are taking stock of the situation and therefore, summing up, we can say that we should, at this point, bear in mind that customer loyalty paths, as well as the programs connected to them, should take on a completely different connotation than that which instead, today, let's find out on the market.
But one of the frequently asked questions is: but then, do I have to change anything compared to promotional flyers?
And in particular, what is there to change?

Before delving into this topic, we must talk about something very important, because it is the basis of all marketing-centric reasoning and, we cannot avoid making it clear.

We refer to the 4 "P's" of marketing which are as many representative levers and which are studied when preparing on the fundamentals.

The marketing mix is that set of variable actions implemented to ensure that a marketing plan, aimed at positioning a product or service on the market, can be truly effective and winning.

This is the strategy that is normally called the "4P" because 4 are the strategic elements of which it must be composed:

  • Product strategy or product strategy: represents those ideas that show how a product or service can be useful for a specific purpose, so I cause a change in the behavioral styles of the people who approach it. Let's take an example: have you ever heard of Active Cruise Control? It is the system by which a vehicle “notices” the obstacles in front of it and the distance from them, and therefore slows down or accelerates according to the parameters set in the vehicle, preventing collisions; here, we have explained the great added value of this product, which some cars can mount as an accessory, with a surcharge. Imagine being on the Grande Raccordo Anulare of Rome, or on the Milan ring road, where you accelerate and brake continuously, but with this wonderful system (I guarantee it because I have it), we can be calm in driving in those conditions. Here, we have created the product strategy aimed at solving a problem!
  • Price strategy or pricing strategy that we put in place when we go to define the continuous sale price of the product; let's say that it is an important accessory, which qualifies the driving level and provides high safety standards to the car, so we position it for this at a medium / high price, in consideration of the fact that it is a high level option. In this case we have implemented the pricing strategy and its positioning.
  • Place strategy or distribution point strategy, that is, how we intend to make the product available on the market. Let's say that we operate through car dealerships, as it cannot be purchased separately from the vehicle, so we use car dealership sellers to illustrate the characteristics of the product, disseminate its peculiarities and then sell it and ...
  • Promotion strategy or promotion strategy which is represented by all the tools we use to reach our target audience. When we were talking about the dealers' sellers, they too will be part of the promotional strategy because, promoting a product does NOT necessarily mean making a discount, but making it known, as it is made known with advertising in all its channels (whether they are television, audio , web, social media, etc.), through direct sales, etc.

THE PROMOTIONAL DISCOUNT is one of the means by which a product can be promoted.

If we find the product "X" constantly on the flyers of small or large distribution, it means 2 things:

1.Either a company faints and risks failing to continuously promote the product or service in terms of price or ...

2. Consider also these aspects in the price so you can then promote it and respecting the parameters that you have previously set, it can therefore bring value to your cause.

Of the two, certainly the second, otherwise do you know how many failed companies we would have met daily?

When we go to launch a product or service we must keep in mind what we said, just a few lines ago, in order to position ourselves on the market in the most suitable way possible for our objectives.

But when do we have to "push" on the accelerator? When we want to sell more… how can we do?

First of all, we must always remember that every product or service must be able to walk on its own feet, so it must be able to sustain itself and establish itself on the market.

The relevant market must be analyzed, the objective we want to achieve in terms of coverage of the market itself must be defined, i.e. how many customers we want to reach, what market share we want to obtain and, according to these objectives, the strategy is developed.

Of course, depending on what I have to sell, the scenarios, the possibilities, the reference market, etc. change. and, consequently, also the strategy.

If I sell a new type of laundry detergent I can choose some ways, if I sell armored doors I will be able to choose others ...

In the first case, that of the new detergent, we can set ourselves the maximum possible goal, that is to reach the total number of households present in Italy (if we distribute nationally), while in the second case, I will have to consider the change cycle of a armored door and relate to the total number of homes.

From the promotional point of view, let's repeat again, that promotions are used to make the product tested and known, therefore to increase the number of customers to build our value in terms of share but also of margins that we are going to create.

Obviously, if I go to place my detergent (for example), in promotion once a month, I will allow everyone to always buy it in promotion so, if I have not taken it into account in the construction phase of the sale price, I will risk going under margin, if not at a loss.

This means, returning to the initial discourse on promotions that, when we constantly see the products in promotion, therefore being able to buy them always and in any case at a price much lower than the normal one, companies have initially taken this into account, so the sale price base is increased; then, depending on how many (albeit few) sales are made at full price and how many in promotion, the contribution margin for each product is averaged.

Of course we have to consider one thing; each product is born with its own contribution margin and therefore with the guideline that must be followed if you want to bring home the necessary margin.

If a product is always in promotion, it means that the company contribution margin already includes a number of promotions defined on an equally defined quantity.

Moral of the story?

Of course we have to consider one thing; each product is born with its own contribution margin and therefore with the guideline that must be followed if you want to bring home the necessary margin.

If a product is always in promotion, it means that the company contribution margin already includes a number of promotions defined on an equally defined quantity.

Moral of the story?

In other sectors, such as clothing, footwear and fashion, in general, we notice more a phenomenon of clear separation between high-end products which, generally, do not suffer from the problems related to the market, and medium / low-end products with a substantial “every day low price”, ie low prices all year round, but that's another story.

The bulk of the market is promotions, which is the main thing we buy. Yes, because more than products and services, we are used to buying promotions of products or services.

Returning to our reasoning, it is clear that every time we go to program a promotion we do not do the work of verifying if, within the 4 levers we have talked about, we have not touched the buttons in the right way but we are repeating some actions. promo because we do it almost automatically, repeating actions already done, only because we do not have the right timing that allows us to make all the necessary considerations (the world goes fast for everyone and this is a very common theme), doing actions with a priori reasoning made on the basis of "the scale of good" or evaluated "off the cuff"…. Well, in these cases, we are not up to the standards that we should maintain when we go to plan a promotion that is supposed to be an event.

To us, to date, it appears that promotions are not generally planned in this way, and therefore it means that this is a point on which it will necessarily be necessary to work.

This means that you are not questioning the flyer, you are not questioning the press or promotions, but you want to reflect on the way in which these promotions are implemented.

From this point we start for an in-depth analysis ... that is, promotions can be even less effective, if not completely ineffective, for four main reasons:

1.if they have not been properly planned, but they are simply the result of something else (I didn't have time to prepare and I accepted what the supplier proposed to me, I had not studied the alternatives to understand if there was the possibility of inserting something more effective instead of what I am inserting in the flyer, etc.), instead of responding to a specific need of one of the parties, if not both, as it should always be;

2. if they have not been planned at the most suitable time, so there is no exact seasonality, there is too little time since the last promotion we did on that product;

3. if there is a concomitance of similar products in promotion which therefore decrease their effectiveness

4. if the pricing strategy is wrong.

So let's go back to what we said before, namely that often, for what is our daily knowledge, promotions are often planned in a hurry, generally not an important basic preparation is done, to understand instead how the latest ones went. , also in relation to the proposed price ranges, the number of sales per customer, the repurchase rate, etc.

All this obviously affects the effectiveness and, on the consumer side, induced reasoning is also generated, that is "so much if I no longer find it here in promotion ... I will find it in another store of another chain, always with the same promo ... "

It is clear that here we enter the field with a very specific strategy, which blends marketing elements related to promotions with what we have said before, regarding customer loyalty, substantially bringing to the market a new possible path with which you can, on the one hand to engage the customer, on the one hand to make him interact with us and thus build loyalty in order, in the last resort, but not in order of importance, to put him in a position to buy products and not promotions!

All chapters of: Loyalty 2.0

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