Trade Promotion (Pt2) Out of sight, out of mind!
When considering trade promotions through wholesaler and distributor networks, the traditional technique of ‘Sell-in, Sell-out’ springs to mind.
I’d like to suggest a further step that can significantly increase sales!
Sell-in, or ‘push’. Aimed at branch managers and counter staff. Used to encourage the placement of a substantial stock order, to promote new product lines, to secure shelf space, and the purchase of old stock.
With 80-85% of stock sold through an in-house telesales department, this is often a primary target for incentive promotions.
Sell-out, or ‘pull’. Aimed at the contractor. This could be the buyer receiving a telesales call, the wholesaler’s invoice featuring a promotion, or the walk-in trade customer that knows the brand.
Prior to participating in a ‘sell-out’ promotion, a branch manager often needs to be convinced that the campaign will stimulate sales.
A strong promotion, let’s say a price promotion, which encourages brand-loyal customers to participate, has the risk of selling stock at a discount that would have otherwise been purchased at full price – you’re giving away margin!
The key here is the brand switcher: Walk-in contractors who are less brand loyal and looking for a deal: discounts, buy-one-get-one-free (BOGOF) offers or even free gifts.
Converting these customers is key to increasing sales and return on investment.
Having developed and run numerous ‘at-counter’ sales promotions, we’ve stopped and restarted many over the years, usually due to product supply issues. This is what we’ve learned:
While the promotions ran, product sales increased – excellent!
Once the offer ended and the promotional material was removed, sales declined – expected!
Once reinstated, sales increased again – sounds obvious!
Yet, our analysis showed that during the time the campaign was running, the number of claims was very low – very interesting!!
So low in fact they only accounted for a very small proportion of the sales increase.
Fair to say, the visual presence of the in-branch promotion and associated POS materials increased awareness and encouraged customers to purchase the product, and at full price.
Only a few of these customers actually participated in the promotion and claimed the incentivised price/free gift.
We have termed this the ‘Sell-At’ strategy; the presence of effective in-branch promotional materials, raising product awareness and encouraging impulse purchase.
MAYDAY: Trade promotions can be a very effective, yet costly tactical marketing tool if poorly planned!
Whether it’s a price promotion, BOGOF, or loyalty program, whatever the value of this year’s campaign will be used as a basis for negotiations with the wholesaler/distributor next year.
Next year, they’ll want the same as this year, plus a bit more…things can quickly spiral out of financial control.