Consumers in today's dynamic economy have high expectations, and their behavior is unpredictable. It is critical to understand what promotional offers are presently having the highest impact. Promotional analysis is a technique of evaluating success or failure of a promotion using past time series data. It can be understood as discovering a correlation between sales patterns and marketing efforts which includes promotions offered and advertising. The objective of promotional analysis is to help a retailer understand the impact of past promotions and hence formulate future strategies which could be applied and adapted to produce profitable results.
Types of Promotions
"Promotions" in any industry is a vital ingredient of marketing plan to retain best customers and to attract new ones. The retail market faces increasingly stiff competition, and is flooded with various promotional offers to drive-in traffic. Hence, the consumer today is left with a large range of promotions to choose from in almost all the product categories. To list a few:
1. Quantity/Product concession
1) Buy one get one free
2) Innovative cross-sell and up-sell strategies
3) Free samples to test new product
4) Offering promotions on particular day of a week to drive sales
5) Pseudo personalized promotions targeting particular customer segment (students/promotions linked to age, height, gender, profession)
2. Price discount
1) Some per cent off per item
2) Fixed amount off per item
3) Discount vouchers
1) On-line/e-mail coupon
2) Mobile coupon
4. Shipping promotions
1) Free delivery of product
2) Money off on delivery item by means of a selected ship mode
These are some of the promotions that may lure customers to purchase a product. In spite of such attractive offers, there is a high probability that a customer may not avail or take advantage of every offer that comes their way.
What retailers should know before launching a promotion?
Mere sales are not enough; the effectiveness of a promotion offered should be measured in order to draw more profit out of the offer given to customers. In order to do so, customer behavior should be analyzed. Retailers often fail to realize that a consumer can have their own parameters like age, gender, requirement, income and preference to evaluate a promotion.