I'd like to return to the discussions of Promotions .We're looking at 4 major "product" categories in using promotions to effectively increase the profitability of your food business. We talked about Push and Pull strategies in Issue 278, now we focus on which products i.e. categories to target for promotions. Good Selling !
Items that 'must be sold' : Almost all of the warehouse, sales, and business management experts I've read and spoken with agree that you need to put having a clean inventory at the top of your to-do list. So the first group of items for the promotion list will be your slow movers that need to be cleared out, your short date items that will expire soon, or products that are being re-branded or repackaged.
If your company is in the position where you have a large amount of items that 'must be sold' you need to take a hard look at your purchasing policies. Don't let the burden of bad purchasing decisions be pushed off to your marketing and sales teams.
Strategies to use: Anything and Everything, get that product gone.
New items you are introducing : New products (products in the introduction or growth stages of their product life cycle) are the bread and butter of promotional strategies. These products have a high probability of increasing your market penetration (both to new customers and existing customers), and have a low probability of 'boomeranging' and costing you profit.
Be sure to work closely with your purchasing department, new products may see a sales spike as your customers try the product but may not see a re-order for some time.
Strategies to use: Educational and Introductory - Samples, Educational Signage, Give-aways, Tie in discounts to related mature products.
Mature Products with Additional Market Share Opportunity : These are the products that your clients could be buying from you - but aren't, or products that could bring new customers to you. You're going to need to work a little harder with these products because there is a 'reason' they're not selling as well as you think they should. A poorly executed promotion here is at risk of incurring a 'boomerang' as your customers who already purchase product shift their buying cycle to take advantage of whatever promotion you run without increasing their overall sales.
Be sure your promotion addresses the reasons that customers are not buying. This could be anything from a reduced quantity requirement, informational signage about the benefits of the product, a push to make your customers aware you have stock and availability, or a move to win a price decision through discounting. Equally as important as making the sale during the promotion be sure that when your promotion ends you have built value in the product and yourself as the supplier to keep the business.
Strategies to use: Loyalty building programs, volume discounts, targeted marketing.
Defensive (reactionary) Product Promotions : The dark side of promotions. Used mostly for products in the Mature and Decline stages of the product lifecycle, often in response to a new competitor in the market, or a new product being introduced that competes with one or your products. You're looking at the highest probability of 'boomeranging' and losing profit but the goal of this type of promotion is to retain customers.
The most important thing about defensive promotions is DON'T PANIC. We use the term reactionary but your reactions should have been pre-planned far ahead of time. Have the value statements for your product line ready for release, if you're a service company be ready with a promotion that stresses service, if your product quality is unmatched, be ready to remind folks, and if you win on price, be ready with volume deals or discounts that still leave you with a comfortable profit.
As you start running these programs it is important to let your purchaser know, this might be a short term fight, or this could be a sign that a product line is on the decline. Even if you shore up numbers in the short term your purchaser should be watching carefully to make sure he's not caught with too much product when the promotion ends.
Strategies to use: Play to the strengths of your product offering.
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