Promotional Risk Management - Vital Facts You Need to Know
Brands seriously need to evaluate their promotional risk as failure to do so can prove very costly, and potentially leave them with a PR nightmare. To ensure that you have the right contingencies in place brands and agencies need to start thinking about promotional risk management at a much earlier stage when considering any form of promotional marketing.
When promotional marketing succeeds it can cost the brand concerned a lot of money and historically brands aren’t always prepared for this. Ideally a successful promotion will see a brand’s products fly off the shelves into the baskets of eager consumers. The reality is that the cost of honouring the promotion and offer could very quickly get out of control.
Promotional risk management helps brands and marketers get a grip on the overall costs of running a promotion. The first thing that needs to happen is that you have to know the maximum number of people who could possibly enter your promotion. Next you need to understand how many people actually will enter the promotion. To understand this better look at how people will enter your promotion (known as the redemption process).
The Profile of the Brand
In the general marketplace brands typically have a profile coupled with a personality. For instance,
a popular soft drinks brand may have more success with a retro t-shirt slogan than one from a detergent company.
Product Type
Products can be categorised into sectors and each sector can have its own usage rates and loyalty. For example, lovers of tea and coffee remain very loyal to their brands so promotions run in these sectors tend to have a higher redemption rate. This is as compared to frozen meals where consumers tend to look for the best deal rather than remain loyal to the brand they bought last week
Past Promotion Results
It is always beneficial to look at the redemption results of similar promotions that have run in the past. Beware though that last year’s fashions, whether applied to clothes or the latest gadget, may not be so popular this time around.
Communication Method
In today’s market promotional campaigns can be communicated in a variety of ways. Historically these methods would, and still do, involve on pack and by leaflet. More and more promotion are being run online and brands need to be aware that a consumer who has taken time to sit down at home and enter your promotion will see a high redemption rate than perhaps a promotion that was briefly seen as the same customer rushed around the local supermarket.
Other Media
Promotional campaigns can be displayed via other media including bill boards and TV advertisements. Whilst many brands will see sales of their products increased with such media the actual promotion itself may not such much success. Note that advertisements that offer a try-me-free or a taste challenge do work very well.
Proof of Purchase
Many promotional campaigns work on the basis that the consumer must first purchase the product prior to participating in the campaign, known as proof of purchase. Consumers can find sending a till receipt a little daunting so this type of proof may have a positive or negative impact on your campaign. Alternatively proof as provided by unique on pack numbers or collected tokens work very well.
I hope I have provided you with a basic insight into promotional risk management and the key facts you will need to consider in order to run a successful campaign.
