Spar InfoTech, Inc.
What is the Most Important Factor in Making a Trade Promotions Successful?
This is the easiest question to answer. Companies will make it complicated talking about the level of discount, tying in to consumer promotions, coupon overlays, POS materials, timing, length of notice to the trade, advertising support, and numerous other items that impact a Trade Promotion. But in simple terms, the most important criteria to make a Trade Promotion successful is Retail Support, specifically End Aisle Display. The reason for this is simple. Nothing happens to generate Incremental Sales or Incremental Consumption without the retailer doing something to create more sales. Here is a trick question. If a Retailer builds a Display of 20 cases for a promotion how much incremental sales will be generated from that Trade Promotion and how do you figure it out? Some people may want to know things like the percent discount of the promotion, is there POS materials, what type of display is it, what is the product category and so forth. None of that is necessary to know. The answer is 20 cases. The retailer can’t sell 21 cases from a 20 case display and the Retailer won’t take down the display and put the product on the shelf so the display will stay up until all 20 cases are sold. The most important criteria to make a promotion successful is Retail Support.
The 2nd most important criteria for making a Trade Promotion Successful is Retail Support.
The 3rd most important criteria for making a trade promotion Successful is Retail Support.
Nothing else matters. The best promotion in the world will fail without Retail Support. The worst promotion will succeed with Retail Support.
If Retail Support is the main criteria for a successful Trade Promotion then the correct question is always what is the best way to get Retail Support, not how to design the best Trade Promotion. Most of the effort and discussion goes into designing a Trade Promotion and the supporting POS materials. The reason for this is that there are whole industries built around designing interesting Trade Promotions, Designing POS and collateral material and tying the Trade Promotion into Consumer Promotions, Couponing and Advertising. That is after all the purpose of a Marketing department. With the exception of Merchandising Companies who build displays in store, there are no industries primarily designed to focus on getting retail support other than the Supplier’s sales staff who is calling on the Retail Buyer.
Hershey Foods was running a very expensive Trade Promotion with a stiking display design. The display was innovative and beautiful and in tests generated significant consumer takeaway. It was going to be run at Halloween which has a natural Consumer and Trade interest and a substantial Off Invoice discount was offered. The product and displays were shipped out 6 weeks early to maximize consumer sales and allow time for the displays to be built. An Audit Company was hired to measure Display Execution in a major market. They reported back that Retail Execution was zero. This was not believed and the Audit was expanded to other markets and Hershey personnel visited the first market to see how many displays were up. If it didn’t turn out that Retail Execution of the Display was under 5% I wouldn’t be telling this story. The result were sales not much different than they would have been without the special display. There are 3 lessons that can be learned from this example (which I have seen repeated many times).
When running a large special program with a significant investment, it is important to Audit what is happening at Retail and not just assume the brilliantly designed Promotion is working.
Since it was Halloween, sales were very high and without knowing the factors that drove the high sales the same type of promotion could be repeated every year; wasting money and not getting any results.
This Trade Promotion did not have the three most important criteria for a Trade Promotion and therefore was only as successful as a standard Off Invoice Trade Promotion.
There are exceptions to the three most important criteria for a successful promotion. Trying to create new users, brand switching or trial (as examples) may have different objectives than maximizing incremental volume and hence other types of criteria would be appropriate. But for 90% plus of Trade Promotion that are routinely run by Suppliers when the goal is to generate Incremental Sales, Retail Support is the key criteria. To get Retail Support items like coupons, advertising, unique displays and many other criteria may develop Retail Support so they have a role to play.
The answer to the question of what are the 3 most impactful criteria for generating Incremental Volume from a Trade Promotion is Retail Support, Retail Support, Retail Support. Whatever is necessary to generate that support is what should be in the promotion design.