Customers Expect Retail Promotions
Your Promotion Management process has become a critical link in your chain. Customers expect promotions and events in the marketplace today. How do you match the right inventory with the right products at the right location and price? Most of you build a promotion plan like always and then hope for the best each month. Funny how that’s almost like buying a lottery ticket. In fact, the lottery ticket is cheaper, and the ROI is significantly higher for your dollar investment.
Goals for Promotion Management
The goal of promotion management is to achieve the maximum ROI (return on investment) when implementing a newly developed promotional program, while also achieving balance between trade spend and incremental volume. After setting the goal, you create a promotion plan and often link that to your open to buy. A few more advanced companies will try to connect the future promotion to past similar promotions by linking the results to project the new promotion sales. The problem is you are creating a goal and a plan without the key middle step: ‘Create a Strategy to Achieve your Promotion Goal’.
Strategy is the Missing Key to Promotion Management
However, implementing a successful promotional strategy is a challenge that many retailers and their suppliers seem to face monthly without good strategy or use of modern software. Why repeat the same process monthly and expect the results to be different?
There is a lot to take into consideration for these company leaders, which makes the strategy process so complex.
Issues that make promotion management in retail such a complex process include:
- Large Product Portfolios
- Unique Discounts
- New and Old Products – To phase in or not to phase in. To phase out or not to phase out.
- Trading Terms
- Ranging and Displaying Processes
- Effects on Stakeholders – Merchandising and Sales, Finance, Suppliers.
When a retail management team is faced with a promotional challenge, the team needs to take a collective step back to then take a long hard look at their ability to monitor whether or not their Promotions are effective and efficient. Maybe now is the time to invest in promotional forecasting.
Lack of accurate monitoring and lack of control are usually to blame for an ineffective strategy. This is partly to blame on the fact that most companies continue to rely on old-school spreadsheet-style reports for promotion management in retail.
Different Promotions = Different Evaluation Processes
Remember that each promotional program that your retail company implements is going to be different and unique, because the products are different and any promotion will have unique attributes. Because of this fact, you should not have one universal set of standards in place for the evaluation of a promotional program’s success. Approach each promotional program with this expectation and realization.
Information to Consider when Promoting Products
The ultimate goal of a successful product promotion is to increase consumer sales. Here are some important factors that your management team should take into serious consideration before implementing a new strategy.
- Products and Services – What product your company should promote?
- Timing and Duration – You’ll want to consider when your company should promote, how often your company should promote, and the length of time for each promotion.
- Brand – You want to ensure that any new deals your company advertises are in full-alignment with the company’s valued brand image.
- Long-Term Impact – Will the new promotion have any potential long-term impact on future base-line sales?
- Goals – What are your goals and objectives regarding sales? Once you’ve established them, make sure to communicate them well to your entire sales team.
- Tools – Are you relying on old-school retail management tools or are you utilizing the latest and greatest innovative software management tools?
Strategy is Key to Successful Promotion Management
Once a successful trade promotion strategy has been implemented, this will benefit the entire organization. Benefits include: an achieved trade spend and incremental volume balance, as well as achieving maximum ROI. Any strategy will go much farther when you implement an accurate promotion forecasting solution with end to end collaboration to link all the players.
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