New thinking behind promotions

The most successful promotions of the 1990s will not result from revolutionary techniques.Rather, they will spring from a more strategic way of thinking that is at once more creative, disciplined, more brand-building, and more integrated with the marketing mix.Premiums and incentives...

The most successful promotions of the 1990s will not result from revolutionary techniques.

Rather, they will spring from a more strategic way of thinking that is at once more creative, disciplined, more brand-building, and more integrated with the marketing mix.

Premiums and incentives have prospered lately in the marketing mix in their role of tie-breaker among an increasing number of look-alike brands.

Most important to marketers is the flexibility of promotions. They can strike surgically to quickly solve a local problem in a small town in New Brunswick, or nationally to support a broader ‘global’ initiative.

Partially successful

But using promotions to tactically leverage short-term results has been successful only part of the time. Many price-off promotions worked as well for the competition, resulting in a continuing profit drain that mortgaged the future of the brand for all the companies involved.

Not only were short-term profits lost, but the long-term value of the brands (ie. brand equity) seemed to decline, partly as a result of the increased use of price promotions to differentiate brands.

Some companies hoped to string a series of promotions together to try (usually unsuccessfully) to compensate for other brand inadequacies. This does not work for long, as many companies have learned. Overuse diminishes consumer interest and participation in these programs.

Patterns shaped

Even general category buying patterns were ‘shaped’ by promotions that trained people to wait for the next price-off before they bought. Companies that live by price discounting alone will not survive this recession – watch the computer clones.

But to companies using promotions successfully, the issue of brand deterioration from ill-conceived promotions is old news; these firms have already absorbed this lesson and now ensure their promotions leverage their brands in the short and long term.

They are creating promotions for their brand that no other company can duplicate, making the old seem new again, adding value, rather than decreasing price.

Recent research supports the notion that promotions using premiums can add to brand equity, avoiding the negative perceptions of price-offs.

Successful promotions never look like add-ons, or after-thoughts. They seem to integrate the whole marketing mix to create synergies among the individual elements that leverage the marketing plan to a higher level.

For example, the communication program from Lands’ End includes product features, price, brand image and promotions – all threaded through one message and delivered through direct marketing.

And these companies’ use of premiums is much more creative.

They understand that premiums can add image dimensions (far from destroying them) that other communication elements alone could not.

How would the California Raisin people have built fun into their product without the ‘rub off’ from their claymation characters?

How would The Body Shop so ably communicate its beliefs (and image) without the ecological causes it features in its window displays?

And how much more salient will Esso’s new campaign be with the return of the Esso Tiger? I know I learned about the tiger’s return from newspaper articles that were there only because of the tiger.

As these companies have recognized the long-term value of relationships with their customers (more important than fleeting product advantages), then even information is becoming a new kind of incentive to help maintain customers.

As everything get more complex, the company which helps simplify the process will be valued.

What these companies seem to share is a more holistic, almost seamless approach to the various elements of the marketing mix. The craft of sales promotion is driven more by the planning process than clever tactics.

Research

Their consumer research (at the earliest stages of the development process) includes understanding how promotion best fits the category and the brand.

They learn how people choose a particular method of evaluating a promotion to understand which type of promotion will be most effective in a particular market situation.

They consider their promotional agency a long-term partner, contributing at these development stages as much as their advertising agency. And the level of creativity sought is equal to that demanded of advertising, to energize a program, to help a message that is not sufficiently intrusive.

In the slow or no-growth markets of the ’90s, the better integration of all elements in the mix can create an almost organic synergy that will leverage the brand without increasing the budget.

Concentration on the planning process will help to use some of the powerful techniques of promotion that do not rely on price-offs, such as value-added, brand velocity, relationship marketing, cause-related and special event promotions.

Promotion will be a more important, more respected, more powerful player in the ’90s.

Ron D. Smith is vice-president, managing director of research and strategic planning at Toronto ad agency FCB/Ronalds-Reynolds.