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Now let's pick up where we left off on promotions.  Do you remember running what seemed like a successful promotion (you moved a lot of product) but still had a down month when you looked at your profits?   We're going to show how you can stop it from happening again. Creating a partner-relationship with your customers regardless of their market segment will help you enlist them in your promotion strategies and create a win win for both. Good Selling !!!!

Last week Jon mentioned that after a promotion distributors will often see a boomerang effect or reduction in sale following a promotion.  This is due in part to the In-Elastic nature of the food market, which states in general price will not have a dramatic effect on demand. 

So promotions are doomed to fail right?  Well if you're expecting to throw a 5% discount on a product and win, yes they are, but not if you've got a strategy in place to help you capture more of the demand that is already out there (increase your market share). When used as part of a sales strategy promotions can be a great tool, otherwise you'll probably just find yourself borrowing from next week's numbers to inflate this weeks sales and sacrificing profit to do it.

For this series we're going to ignore using promotions to clear out dead inventory or rush short dated product.  Those strategies aren't used to increase profitability or market share directly, they're used to salvage liabilities.

So let's look at the two main types of promotion strategies: Pull and Push.
(thanks go out to the Small Business Bible)

Pull strategies are designed to target the end consumer.  Distributors and processors working with supermarkets and retailers often use the term "promo" to describe a pull strategy that gives a discount 'directly' to consumer.  Other examples of pull strategies could be samples, coupons, prizes and sweepstakes, or just a simple point of sale display.  Whichever strategy you use you're pulling consumers into the sale.

Push strategies are designed to target further distributors or retailers.  One of the most common versions of this strategy I see are 'volume price breaks.'  In a push strategy you're encouraging the retailer to push the sale of your product.  Other strategies include buy-back guarantees, competitions, contests and discounts.

Combination strategies utilize some Push and some Pull techniques.  One service I've seen that is an excellent example of a combination strategy is complimentary menu preparation.  A processor or distributor will help a retailer or restaurant with menu preparation providing an incentive to the store (the cost savings on menu prep) and an incentive to the consumer (attractive branded menu).

Now that we know the strategies we can pick which strategy suits your customer segments.  It is critical to align your promotional strategies with the customer types that will result in an increase in sales.  In locations where your customer has a good deal of 'clout' with the consumer a push strategy may be appropriate.

• Diners, white tablecloth restaurants, butcher shops, and specialty food stores are places where consumers will often ask the opinion of the store and a push technique can be more effective. 
• Larger grocery chains, convenience stores, and 'fast food' style restaurants may benefit more from pull strategies (though you may need to add a little push so they let you put your signage up.) 

Once you've picked a strategy and matched it to the appropriate customer group it's time to decide which of your items to include in the promotion, which will be the topic for our newsletter two weeks from now.  Next week we pick up on where we left off with Jon Schreibfeder's series on inventory management.

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