Promotional marketing in action…
… is a sequence of promotional messages along the shopper/buyer journey that adds fun, rewards, stimulates excitement and spontaneity and persuades the minds of shoppers/buyers (and even retail therapists!) to reach a tipping point – and buy!
What effect do promotions have on the shopper/buyer?
Put simply: all marketing communications build a shopper/buyer’s mind file, and research shows that six communications are needed along the journey to purchase before the decision to buy is taken! Adding a promotion to each of these communications does what it says above.
Shopper/buyer Insights now show that, unsurprisingly, on the journey to purchase, the shopper/buyer builds up a ‘mind file’ on a brand or product or retailer or supplier. The shopper/buyer adds every relevant message to that mind file, whether from advertising, from direct messages online, through the post, from mobile/social media and word of mouth or personal experience. Promotions alongside create a favourable impression that is added to the ‘mind file’.
This ‘mind file’ builds to a tipping point for the shopper/buyer as to whether to purchase or not and at the point of sale, a ‘sales promotion’– online or in-store – can tip the balance and get the shopper to buy or a buyer to place an order. ‘Buyers’ for B2B are given a mention throughout the book as they too are human beings and the same logic operates for them as for shoppers, though they are constrained by process and their work culture (see Chapter 3).
Marketers have to react to the shopper/buyer journey’s researched Insights, with matched promotional marketing
So, one key to future success for all marketers is to really understand shoppers/buyers from Insights gleaned from big data and market research. Technology allows a marketer to analyse data and social media for better Insights and to be more precise in targeting messages so that there is less waste and less sending of inappropriate messages to the wrong shoppers/buyers, which of course can irritate. Finally, build with promotions, through multi-channels tuned to the shopper/buyer, the messages that persuade and convince along the shopper/buyer’s journey until that tipping point is reached.
Remember to think retail therapy as well as shoppers’ commodity buying. People go shopping for a rewarding experience. No one buys chocolate to be miserable, so make promotions add to the fun of buying any product or service. If the fun goes out of it, so does the spirit that makes buying and selling part of our lives, whether as customers or as business clients. Of all the marketing tools available to the marketer, a promotion can most readily be used to give that sense of fun to the customer.
The marketer, however, has other ‘customers’ to consider: the shareholder, the employee and the management team (including the accountant and finance director), which raises serious points too. Some of this book necessarily talks about detailed mechanics – how the customer or buyer responds – and the codes of practice that apply. It’s also impossible to look at price promotions without some reference to economics.
BRIEF 1.1. What do British shoppers really want? (Adyen Survey 2017)
• Sixty-three per cent say they are more likely to complete a purchase in-store than online.
• Sixty-nine per cent say they shop online to avoid queues.
• Only 3% of Britons say they no longer shop in-store.
• Fifty-seven per cent of consumers name queuing as their biggest frustration with the in-store experience.
• Sixty-four per cent of people will abandon a purchase if they think the queue is too long.
• Seventy-three per cent of shoppers have abandoned an online transaction because the delivery cost was too high.
• Sixty-four per cent of people enjoy browsing.
• For 75%, it is important to see, sample, touch and try on items.
• Sixty-eight per cent go online to compare prices.
• Seventy per cent enjoy the convenience of having goods delivered.
• Ninety-five per cent of people shop online.
• Forty per centt of people have never shopped via an app.
• Seventy-five per cent have never purchased an item through social media.
• Sixty-eight per cent would jump ship if they spotted a better deal – proving once and for all how much Britons love a bargain.
• Forty-eight per cent of shoppers prefer to deal with a person rather than a machine.
• Twenty-five per cent don’t like talking with checkout staff.
• Sixty-three per cent like shopping online as their contact details are saved, meaning they can pay quickly.
• Fifty-six per cent of men enjoy in-store shopping due to its sociable nature.
• Eighty per cent say they would rather not use cash in-store.
• Sixty-two per cent believe they know more than the store staff.
• Sixty-one per cent of people would like store staff to have mobile payment terminals to avoid queues.
The extent of promotional marketing
Everywhere – especially mobile. A cursory check in your supermarket, your local paper or pub and the direct mail sent to both your home and your business address will give an immediate feel of the extent of promotion today. Promotional marketing is found whenever a supermarket offers ‘three for the price of two’, a pub offers a happy hour, an insurance or charity mailer offers a free pen for replying or a product offers a free draw, competition or mail-in. On the mobile phone, too, if permission has been given, offers will appear for drinks and for happy hours; and from estate agents, the latest houses and flats coming on to the market. Whatever you allow will appear. The mobile phone can now also be used to respond to advertisements, texting a number with a code word; ‘mobile vouchers’ allow a message to be sent back that includes access to a promotion included at the point of purchase through a QR or barcode reader. A main use of the mobile is sharing anything with others. As a marketer, if you are not doing so, you should − indeed you must − ‘go mobile’.
A good promotion will stop customers for a moment in this world of choice, cause the shopper/buyer to think about a brand and product and, if it has the right impact, move him or her to make a decision to follow up on the promotion. There are hidden benefits – if customers take up your ‘three for the price of two’ offer, they will not be purchasing a competitor product while using yours, and their experience of enjoying a product or service is a great influence on future purchases. Indeed, a second promotion delivered with the product or service when the customer takes up the first promotion can entice them to make their next purchase of that product or service. In mobile marketing parlance, use a ‘bounce-back’ or two.
More is now spent on promotion than on all other media, including advertising and direct marketing. Always check the basis for comparisons – the amount spent on advertising in the United Kingdom (UK) is now quoted as a figure that includes production costs, agency fees and commission as well as media expenditure. It also includes direct mail. So, when making comparisons, it is important to know what is included. The figures in Figure 2.2 are media spend only, and the direct mail figure is placed under direct marketing (i.e. not included in advertising). Figure 2.2 shows that all advertising media spend – TV, press, outdoor etc. – is about a third of the spending on promotion. In a nutshell, promotion is really big – about the same as the rest (advertising, PR, direct marketing) all put together.
BRIEF 1.2. Promotional merchandise spend. BPMA research shows that just under £1 billion was spent in 2016. Merchandise such as pens, USB sticks, branded clothing, desk items and calendars are popular across all industry sectors, and the recall of brand names is high across all management levels (BPMA survey in 2014).
Who participates in promotions? Research, started in 1986 and repeated annually since, shows that over 70 per cent of the population has taken part in competitions or games on products and services, with almost 60 per cent of the population actively participating in some form of promotion in any given month – whether it be entering a competition, sending in for a free gift or using a money-off coupon. This makes participating in promotions one of Britain’s biggest active leisure activities. Compare that with, for example, the 11 per cent of the UK population participating in golf in any way over a year.
Everyone else is using promotions. If you are not undertaking promotion in your organisation, you should be wondering why not. The figures given above demonstrate that promotion is no longer an also-ran in the business of marketing products and services, but one of the most important tools available to companies and a major part of our day-to-day lives. The best basis for understanding promotion is from the inside. Get involved in promotions: collect coupons, send in for offers and seek out special offers. Have a look at how others do it. Study the rolls of honour and the winners of the latest IPM and IMC competitions. Read why the judges awarded the prizes.
Why promotional marketing keeps growing
There are eight main reasons for the extensive growth of promotions and for why managers find that promotions are essential to building customer relationships:
1 Firms are getting better at what they do. A promotion offers a way to be better in markets in which most products are excellent. The European vice-president of a major toiletries group commented, ‘It’s no longer enough to have an excellent product at an excellent price; I need a tie-breaker’. Companies everywhere are facing declining real differences between products and services, increased distributor power and faster communication of alternatives. They have to fight harder and faster for every sale.
2 Customers look for more from the brands they buy. A promotion offers novelty, excitement and humour at the point of purchase, which customers respond to. Firms are having to rethink the relationship between attitude and behaviour. Trying to create awareness of and a positive attitude towards a brand by means of advertising is seen as less effective than encouraging a sale that may lead on to just such a positive attitude to the brand. That encouragement is achieved by promotion. It is, in effect, advocating a kind of experiential marketing – a much-in-favour part of field marketing.
3 The pressure to achieve short-term results is growing. The fortunes of brands and companies are increasingly volatile. Promotions can be devised and implemented and take effect far more quickly than other forms of marketing. This is of growing importance as demands for short-term profit performance grow, despite people urging a long-term view.
4 TV audiences are fragmenting as the number of channels grows, making it more expensive to reach certain audiences even though TV advertising has probably never been cheaper; the decline in community identity at a local level is making it more difficult to reach particular groups (such as the young) via local media – only mobile and social media work. A 15-year-old achieved prominence by describing how his generation switches off from TV advertising and Twitter but does register cinema advertising.
5 The growth in the sheer number of competing brands and products is leading people generally to switch off from many of the advertising messages beamed at them.
6 Advertising research has shown that the sales effects of TV advertising over a four-week period are between two and seven times greater when the advertising coincides with promotions. This important finding came from a survey of 21 different brands in eight different consumer goods markets that integrated the shopping behaviour of 9,000 households with TV viewing data. In the case of 2 out of 11 established brands, where the effect of TV advertising with and without promotional activity could be measured, TV advertising was only effective when promotions were also taking place. The same result is now coming from internet and mobile buying surveys. It might be said that the only advertising that works and registers with audiences is that which amuses, offends or offers a promotion.
7 A promotion can be applied anywhere in the cycle to retain a favourable customer relationship, for example, when a sale is lost or a computer has automatically penalised a customer when there was, in fact, a justification for the customer’s action. A promotion is an excellent way to restore or retain goodwill.
8 In mobile marketing, a second – lesser – promotion in a second bounce-back can make all the difference to retaining customer interest and future responses.
The effect of technology on brands – the shopper’s view
In the United States (US) and UK, the majority of the population own smartphones. In the UK, the growth trend is also for mobile video and social interaction (sharing experiences through photos, videos, opinions and comments). The shopper is using the web pages, on his or her mobile (there is less use now of tablets and PCs), both as a showroom and for actual purchase. The shopper seeks engagement with the brand, supplier and retailer (see Chapter 6 as to how to respond). Personal recommendations, commentary and participation offer a great signal to those in one’s sphere of influence, for, if delighted, shoppers then are given the opportunity to share their passions. Shoppers are accustomed to moving from one technology to another – they expect the brand or retailer to do the same.
Augmented reality – for example, where a shopper clicks on a view and computer-generated pop-ups add information or descriptions to the scene; geo-location, where the mobile or tablet using GPS produces messages related to the shopper’s location (usually near the retail store or a brand outlet); and second screen, when something seen on TV can be accessed by the shopper on a mobile or tablet or through an app (it might even be downloading the app while the shopper is watching the ad on TV) are strategies that should become more widely used cross channel. ‘Attract’, ‘engage’ and ‘delight’ will be the marketers’ watchwords. Make sure that any platforms you use work successfully in all of the regions and countries from which you draw your customers.
Games are another way to support brand advertising – principally through in-app purchases or free-to-play (freemiums) (iButterfly does this in Japan). Music apps should, when offered, be presented in a way that is both personalised and automated. Cross-channel campaigns should exploit the differences between mobile and tablet – making the message a holistic experience; that is, where one message complements another.
Do loyalty, attitude and behaviour play a part in marketing?
Does loyalty exist? Brands are designed and built to secure loyalty to encourage purchase, generally at a higher or even a premium price. Loyalty is supposed to be based on attitude, though it is not necessarily a predictor of behaviour; that is, people are inclined to be loyal but if routine or habit are disrupted or an alternative value offer is made, they can be distracted from loyalty to the store card they use.
The heavy trend to discount promotions is developing two types of consumer: those that are not driven by price alongside brand, and those that are. This suggests three different measures of loyalty:
• customers who are loyal under all normal circumstances;
• those who are loyal under discount – in particular, for example, when a shopper can ‘larder fill’; and
• those with no brand preference.
BRIEF 1.3. Per cent sold on promotion. Forty-four per cent of all goods are now sold on promotion with 60% of health and beauty products on a price promotion at any one time. There is a need to constantly promote products to maintain customer loyalty (and, of course, re-invigorate the engram).
BRIEF 1.4. £1 pricing. The move to price everything at £1 led to product price increases by some stores, with associated sales increases. The Grocer pointed out an example of where this happened in Asda supermarkets.
BRIEF 1.5. Loyalty cards. IPM research in the Retail Bulletin indicates a broad trend whereby loyalty cards have moved their two major users in the UK (Tesco and Boots) above their expected market position (with 68% of sales from 70,000 Advantage card holders).
BRIEF 1.6. Myer loyalty. Myer of Australia has an extensive loyalty scheme. Its main benefit for the stores is the data it provides on shoppers, not loyalty per se.
BRIEF 1.7. Feedback from card purchases. A European vice president of a major credit card company disclosed that the analysis of purchases on branded cards across Europe shows that nowhere near total loyalty exists. It would seem that loyalty is a myth.
BRIEF 1.8. DunnHumby error. Errors in measuring loyalty can occur – DunnHumby tracking of volume purchasing for Tesco recorded a particular product as ‘low loyalty’ and it was delisted, while Morrison’s customers loved the same product.
Is loyalty an extension of attitude and behaviour? Behaviour and attitude have a complicated relationship with each other. Practical examples illustrate this. Surveys show that far more people think that regular exercise is a good thing (attitude) than actually practise it (behaviour). Surveys also show that people drink more alcohol (behaviour) than they are prepared to admit to (attitude). For years, the government urged people to use seat belts (attitude), with only limited effect. They then passed a law making it illegal not to wear a seat belt (behaviour). People grumbled at first, but buckled up. Over time, people’s attitude changed to accord with the behaviour they had become accustomed to.
Compromises do occur; behaviour beats attitude and loyalty when a customer is lured into buying a competitor product on price drop. Loyalty is also undermined by bulk buy discounts, though the OFT intervention (November 2012), requiring the price of bulk purchases to be a genuine discount on the list price, suggests that the customer is not as streetwise as he or she is supposed to be.
BRIEF 1.9. Christian churches, for example, used to think that people started belonging to a church because they believed – often after a conversion experience. However, it is now understood that people belong before they believe. Studies in America have shown that people become involved in a church because of friends or family. It is often quite casual at first. Only after a period of years do they come to realise that they believe. The process of ‘belonging before believing’ is about ‘behaviour before attitude’. The involvement model (see the next section) suggests that if you involve the shopper in your product or service sufficiently, then they will believe and buy.
Purchase models
The involvement model for purchase. A number of models describe how people buy, one of which is the involvement model which is increasingly seen as a realistic description of the way in which consumers buy products and services. This ties in with the need for six messages that build the mind file while instilling involvement. The model extends well beyond marketing.
This suggests that marketing campaigns that directly impact on the behaviour of customers succeed, and the desired attitude to the product or service will follow. A creative promotion can do this. Advertising campaigns aimed primarily at creating awareness and changing attitudes through adverts are less likely to succeed.
The Ehrenburg model – awareness-trial-reinforcement (ATR) is based on the same ‘early experience convinces’ approach in the commercial world. Ehrenburg demonstrated that loyalty can be mapped as a statistical effect, resulting from the higher penetration that brands achieve, with their higher marketing spend. This suggests that marketing campaigns that directly impact on the behaviour of customers succeed, and that the desired attitude to the product or service will follow. A creative promotion can do this, such as for Nescafe, O2 or Orange. Post-Olympics, the distinctive symbols of success used by Mo Farah and Usain Bolt have been adopted by some brands. Advertising campaigns aimed primarily at creating awareness and attempting to change attitudes are less likely to succeed.
Brand experience! A promotion, offering a sample, or the deployment of experiential marketing can assist in a change in behaviour. Persuading someone to ‘try’ offers the chance to experience a product and the brand values that come with it (once you have seen that the product or service matches or could match your preferred behaviour, then if the process continues, it is only a question of time before the attitude follows the behaviour and the shopper buys the product or purchases the service). Encouraging someone to try a product or service is often the best way to begin the process through which he or she becomes a long-term customer. Never give just one sample – always give more, so that he or she can try one on the spot and the second in slow time when the customer will also absorb the engram and be able to get a second opinion later. Giving away more also looks generous, and that is a plus to build into the ‘mind file’. The packaging must name the brand and website.
BRIEF 1.10. Face cream samples. In Neal Street, London a shop hands out soap samples with no packaging messages. What a waste – one can’t recall the brand later. The same in the Kings Road. In St Christopher’s Place, they hand out two branded samples – the mind notes the generosity and the brand is reinforced when the sample proves itself – well done Sakaré, the name on the sample.
It makes increasing sense, in the light of evidence, that behaviour precedes attitude to depend on behaviour in marketing. Hence, for example, the importance of bounce-backs in mobile marketing, which stimulate further involvement. A bounce-back is a second promotional offer after a shopper accepts a first promotional offer or responds to a requested action. It is a kind of ‘thank you’.
How to use this book
There are four parts to this book. Part I, ‘The context’, has three chapters:
• This chapter sets the current scene for promotions.
• Chapter 2 describes where promotions fit into marketing and how marketing fits into business.
• Chapter 3 starts with the customer and describes the component parts of the offer a business makes to the shopper or buyer. It sets out, from recent Insights, how the shopper or buyer behaves, the importance of the engram and building the ‘mind file’ and the six message opportunities, including achieving ‘excess share of voice’, that drive a shopper to the tipping point, when they decide to buy. There are barriers that should be removed. B2B buyers have additional hurdles to overcome. You should read this chapter.
Part II describes the promotional marketing alternatives – the why, when and how of promotions.
• Chapter 4 describes the importance of creativity in promotions.
• Chapter 5 describes the suppliers that are there to help.
• Chapter 6 covers non-participative, passive promotions without offers – and the media that deliver them.
• Chapter 7 looks at how shoppers actively pursue and take up promotions themselves, offered through mobiles, websites and other associated technologies, and what retailers, brand managers and suppliers can do to encourage and support this activity.
• Chapter 8 looks at participative promotions (brand experiences) that a business can foster to encourage shoppers to buy.
• Chapter 9 describes what promotions can do across all the other alternative media and channels.
• Chapter 10 covers the five standard promotional offers.
These first 10 chapters are crucial for understanding what promotions can and cannot do. If you are tempted to dive straight into the implementation and skip Parts I and II, resist. You can use the techniques of implementation to best effect only if you are clear about the thinking that inspires them.
Part III is the implementation of promotions – the techniques to apply.
• Chapter 11 cover in-house activity – shopper marketing – to gain Insight into the shopper, how to structure and organise a business to undertake promotions and to avoid disaster and ensure that all the elements work together.
• Chapter 12 covers how to implement a promotion.
• Chapter 13 looks at the important area of international promotions. These are promotions that take place in a global economy with significant national regulations. Even if your concerns are local, the chapter is full of ideas. In larger companies, promotions span national boundaries.
• Chapter 14 covers the legal aspects of a promotion. It sets out the principles behind the UK Code of Sales Promotion Practice and discusses recent case studies of promotions from the Advertising Standards Authority (ASA). The CAP code describes the variety of rules that apply in the UK and in other countries. It is a must, as a reference, for any promotion you run.
• Chapter 15, on marketing effectiveness and accountability, is essential for ensuring that your promotions meet the marketing objectives you set.
You will find Part III useful for years to come. You may not want to read it all at once. You will probably want to dip into it and refer to it for the nuts and bolts of techniques you may want to use now or in the future. If you are studying for a marketing course, you will find the data you need on the range of techniques available to you.
In Part IV, at the end of the book, there is a chapter of further information, listing useful email addresses.
Case studies and briefs
There are case studies and briefs throughout the book, illustrating the text and giving examples (and in one historic case, the worst) in promotional practice. Use these for ideas for your business sector and your business challenge. Generally, they have been placed at the end of the chapter to which they mainly refer, but they illustrate the many types of promotions and their use in different business sectors as well.
Be aware that, though for completeness, the range of case studies and techniques is extensive, some are probably less relevant today for certain target audiences; for example, the advent of low-cost airline fares made air flight tickets less ‘rewarding’ as a promotion than in previous years, though this could change. The author won tickets to Paris on Eurostar, and was delighted to do so.
With many of the case studies, there are questions to get you thinking. The problem with including case studies and briefs is that they are out of date; however, a creative marketer will be able to use an old case study or take the point made in a brief as the basis of an idea and update the promotion. The author found this happening in Vietnam.
Self-study question
1 Describe the difference between attitude and behaviour. Which is more important to the marketer in the long term, and which in the short term?
(Remember, answers to all self-study questions are in the text.)