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Industry Updates

Combining Direct Response and Sales Promotion Techniques

17 Apr 2011

Some Basic Guidelines

By Robert F. Bobowski

INTRODUCTION
There is an interesting phenomenon occurring in marketing today. As the knowledge of direct response techniques is becoming more widely known to sales promotion practitioners and vice versa, the combination of these two methods of reaching buyers is creating an interesting and powerful synergism.

If you are a direct marketer, by definition, you practice a marketing discipline that provides an accountability of sales reactions directly relatable to advertising expenditures. Sales are primarily transacted via the telephone and/or mail.

Now put on a different hat.
When you are in retail promotion, the sales numbers are not as easily relatable to efforts. Imprecision results from using some combination of tools and techniques, from a wide variety available, to create a persuasive force generally at the point of sale.

And perhaps, as a direct marketer, you're saying to yourself, "Maybe we should look at retail exposure and retail techniques, there may be something there for us."

Sales promotion gives you the choice of many offers to catch buyer interest. Games, contests, sweepstakes, tie-ins with other marketer's, incentive programs and more are among the mind-boggling options you encounter in the incredibly varied world of sales promotion.

But, lest you become overwhelmed, it is not so important to master all the nuances of sales promotion as it is to understand certain applications of sales promotion to direct marketing.

A number of examples are presented here, to familiarise you with some basic combinations of these two forms of persuasive communication.

Along with each example are the suggested promotion tools used for that particular effort. However, details regarding all the applications of those tools are not presented; rather, that is reserved for another Manual Release for this section, which will also cover many additional promotional devices.

CAN YOU ACCEPT RETAIL MARKETING?

One major aspect of involving sales promotion in your direct response efforts is the feasibility of exposing your products or services at retail outlets.

This does not mean the establishment of a network of dealers or a retail distribution system. One of the great synergisms in sales promotion comes from the tie-in of two marketers whose combined products (or services) create an offer that helps both to an extent that far outweighs their anticipated sales were they to have acted as separate advertisers. So, for both exposure medium, as well as profit, that tie-in partner may be your retail connection.

However, if you already are established within retail outlets, so much the better. Some of the following suggestions are more suitable to retailer or dealer-oriented marketers who may want to apply direct response techniques to promotions at the point of sale. These are not the full extent of possible applications but merely hint at the combinations of techniques, tools and tie-ins limited only by your imagination. As summarised concept statements, they are:

  1. From "Catalogue" To Counter: Direct response initiates the sale, sales promotion closes it.
  2. A New Product List Is Created when two marketers with compatible, non-competitive products participate in a tie-in promotion.
  3. Prospects Double-Up As Customers when two marketers, offering non-competing products or services, team up to pool their marketing dollars with a promotion to mutual customers via two-part game pieces that must be matched.
  4. Catalogue With Free Merchandise. A catalogue is used as a prize selector guide at point of sale, which helps acquaint consumers with the catalogue.
  5. Retailers Are Targets, Too. For any sales promotion retail tie-in, the store managers should be focused upon for their involvement to heighten the overall program's success.
  6. A Surprise Element can heighten the response to any mail promotion to build store traffic.
  7. Prizes & Premiums without Commitment can effectively draw consumers to the retail location to view the prizes offered to the mail sweepstakes offer they have responded to.
Some may seem very basic, almost surprisingly simple. And you may even recognise previous uses. Keep in mind that we are seeing the emergence of these combined techniques in a major way, which evolved from individual instances of trial and success.

FROM "CATALOGUE" TO COUNTER

CONCEPT:
Direct response initiates the sale, sales promotion closes it.

A multiple-page folder, looking like a catalogue, is mailed to target households in a radius around participating retail outlets. Included with the "catalogue" are:

a) Computer letter from retailer including an offer of a free gift (advertising speciality item related to product line) illustrated within a store coupon as part of the letter.
b) Set of dated/coded discount coupons on various items shown in "catalogue" and available at retail outlet.
c) Window envelope capsuling offers.

At the point of sale, a kit is provided to retail outlets containing display materials to guide responding customers to promoted merchandise. Kits include:

a) Mobiles, or hanging posters.
b) Window banners.
c) Shelf strips.
d) Merchandise easels, possibly price numbers.
e) Cash register fronter.
f) Sales clerk buttons or badges.
g) Ad slicks/electronic media material if required.
h) Information material to retailer.

SCENARIO:

Consumers receiving mailer notice free offer in letter, browse through "catalogue" (without prices), and see discounts in coupon sheet on some of the products in catalogue.
  • A small proportion of consumers visits retail outlets, pick-up free gift, look over promoted items; a large proportion of those customers buys something while at retail outlet.
  • The time value of discount coupons is synchronised to be continuous in order to bring in customers beyond first wave.
  • Graphic attraction of "catalogue", which is generally retained, re-interests customers in merchandise items over longer period of time and builds added regular sales after promotion ends.
  • Redemption of coded coupons provides accurate accountability of promotion response by outlet.
A NEW PRODUCT LIST IS CREATED

CONCEPT:
Two marketers with compatible, non-competitive products participate in a tie-in promotion to develop a mailing customer list for both of them.

One of the two tie-in partners has a retail presence, which the second partner uses to advantage in exchange for perhaps promotional dollars or media exposure coming from the non-retail partner's advertising program.

A "give-away"- drawing for prizes - is announced via the targeted prospect media, and themed to fit the participating marketers' products. The prizes, incidentally, may be "leveraged" for little or no cost based on the media exposure given to the prize manufacturers and the weight of the advertising. (Not every drawing need be termed a sweepstakes, which is just a handy way to generally describe a prize give-away based on chance.

Incidentally, the rule of thumb governing such give-aways is that it is not a lottery and, therefore, legal if only two of the three following elements are involved: prize, chance, and consideration. Generally no purchase (consideration)'"is required to enter, thereby legalising the promotion.)

The give-away can also be an "everybody wins" promotion, assuming a very high response of entrants and, therefore, a large list of targeted prospects for future mailings, etc. A small proportion of prizes are high motivation items, the remaining large proportion of prizes are very small value items and/or discount certificates for products of either or both tie-in marketers.

One of the keys to the success of this technique is that prospects may respond (enter the give-away) either via the mail or at the local retail outlet where they might normally shop. Entry forms are part of a coupon sheet containing coded merchandise offers from both marketers and incorporate the promotion theme. Distribution of the sheet would be maximised, based on the marketers' media, including:

a) Part of print ads*.
b) Within mailers*.
c) As a product insert (or in-pack).
d) As a take-one at point of sale.

* Identifying the retailers/outlets

At the point of sale, a retail display kit is provided which contains materials to guide customers to the promotion merchandise area. Kit includes:

a) Poster or large easel featuring prizes.
b) Window banner.
c) Padded take-one sheets of entries/coupons.
d) Product inserts (if not in-packs).
e) Shelf strips and/or special product stickers to feature the offers/prizes at the product display.
f) Drop box for entries.
g) Large envelope for return of entries to marketer or drawing fulfilment house.
h) Ad slicks/electronic media material if required.
i) Information material to retailer.

SCENARIO:
  • Consumers are exposed to give-away and coupon offers, and saves those, which are of interest.
Response will be in three forms:
  1. By-mail entrants, who may visit stores with coupons.
  2. Retail entrants who bring in their media-distributed entry forms and perhaps use the merchandise coupons.
  3. Retail entrants who use the in-store entry forms, perhaps using the attached merchandise coupons.
  • Retailers return entries, which are used in the drawings and, then, compile a list shared by tie-in partners.
  • Sale of merchandise is traceable to coded coupons.
  • Cost of list development is nominal, partly funded by merchandise sales.
PROSPECTS DOUBLE-UP AS CUSTOMERS

CONCEPT:
A tie-in program of two marketers, one with a customer gathering place such as travel conveyance (plane, train, bus) or location (music concert, store, hotel, office), where customers and prospective customers interface and help motivate one another.

Both marketers, offering non-competing products or services, team up to pool their marketing dollars with a promotion to mutual customers via two-part game pieces that must be matched.

A themed game is created to appeal to the prospects that frequent the type of gathering place of one of the marketers, Prizes are developed in one of two ways:

a) Same prize to each person of the two whose game pieces match.
b) Prize points to each person matching to be retained toward a choice of prizes at various point levels. This is especially important if customer frequency is involved.

Game Piece Key
Rub-off game pieces are used. The matching element can be fronts and backs of sentences, parts of vehicles, names, numbers, or even directional devices like maps or routes.

An equally important use of game pieces is their value toward specific offers by the tie-in marketer(s). As part of the advertising media, a group of coded offers would feature the use of non-winner game pieces as coupons or certificates to help sweeten the price or product-combination ("2-for") of the offers. Multiple game pieces can also be used to increase the discount on certain items, up to a limited amount, as a "bargain booster".

Game piece distribution would be limited to:

a) Advertising media targeted toward profiled prospects.
b) Mailers to targeted prospects and customers.
c) At the gathering location.

The pivotal part of this technique is that in order to know if they won, people would have to reach other game piece holders at the location (but not where a fare would be required (consideration) in order to meet those game card/holders). Doing so, they would be
  1. familiarising themselves with the one marketer's location, while
  2. allowing the enthusiasm of two interested parties to create synergistic excitement.
The fact that even losers can be winners via the value of non-winner game pieces, tends to redirect the losers' attitudes positively, towards sales interest.

At the gathering point, a display kit would be provided, to help direct prospects' and customers' interest to the promotion. Kit includes:

a) Medium-sized easels or posters with capsuled data and prizes featured.
b) Quantity of offer sheets each containing a game piece to be matched.
c) Themed buttons or badges for service representatives.
d) Ad slicks/electronic media material if required.
e) Information material to local manager.

SCENARIO:
  • Prospects/customers reviewing offer sheet with game piece realise the two responses possible: a) go to gathering point to try to match game pieces, and b) take advantage of offers whether game piece matched or not.
  • Those within the gathering point (on a plane, at hotel, in store, etc.) try to match game pieces with numbers of others, and thereby create a friendly atmosphere, which positively affects their perception of the products, and results in a number of subsequent sales.
  • A proportion of non-winners (non-matches) as well as non-tryers will take advantage of offers.
  • Redemption of coded coupons/certificates within offer sheet provides accurate accountability of promotion response.
  • Record-keeping of winners at each gathering point provides accurate data regarding the proportion of game trial response geographically, which can be compared to coupon redemption statistics.
A CATALOG WITH FREE MERCHANDISE

CONCEPT:
Catalogue is used as a prize selector guide at point of retail sale; helps to acquaint consumers with its products and stimulate order trial.

A catalogue marketer and retail marketer (non-competing, possibly at supermarket class of trade) team up to create a "choose your own prize" sweepstakes. Along with other point-of-sale materials, an actual catalogue would be provided to each retail outlet, so those shoppers could see the wide variety of prizes available.

This technique not only helps the sweepstakes promotion graphics to feature an incredibly large number of prizes, but also gives the catalogue marketer an excellent showcase for the catalogue's various products.

Special entry and winner concepts are used for the sweepstakes, with pre-numbered forms. This permits the pre-drawing of winning numbers, and the opportunity for entry holders to check a winner list at the point of sale to see if they are among the lucky ones.

Various prize levels in the winners list would be shown by points, which correlate to product prices in the catalogue; e.g., 5,000 point prize winner can choose any prize(s) totalling up to $50.00.

The existence of a prize catalogue at the retail location will attract many people to participate since they cannot only check to see if they are winners, but also to pick their prizes, if lucky. This obviously builds desired store traffic for the retail-oriented partner. Prizes are used also by both the retail and direct marketing partners for future sales: in-packed within each prize is an assortment of bounceback offers (or samples).
This technique can also be used with a second retailer as a tie-in partner who markets via catalogue showrooms. In such a case, both types of retail outlets feature the same material, but the catalogue showroom adds a token display of products from the other partner's merchandise.

Sweepstakes entries would be distributed along with dated product offers from the retail and catalogue marketing partners via:

a) Advertising media targeted toward profiled prospects.
b) Mailers to catalogue marketer's customers/prospects, identifying the retail outlets.
c) Mail-in consumer requests for entries.

At the point of sale, a kit is provided to retail outlets containing display materials to guide responding customers to the promotion (to see the winners list, prize catalogue, etc). Kit includes:

a) Mobiles or hanging posters.
b) Window banners.
c) Poster with prize-winners list.
d) Overwire hangers, if promotion is large enough.
e) Shelf strips or danglers.
f) Catalogue with special anchoring device to keep it from being removed.
g) Ad slicks/electronic media material if required.
h) Information material to retailer.

SCENARIO:
  • Consumers would bring their numbered entry pieces to the retail outlets, and check the winner list.
  • While in the store, they would possibly a) look through the prize catalogue, enhancing their perception of the catalogue marketer's offers, and b) redeem coupons offered by the retailer.
Shopper", will actually overdo their qualifying act in hopes of being noticed. This technique will help bring hesitant retail shoppers to the point of sale who are motivated by the chance of getting prizes which can be certificates for cash, prize merchandise, discounts, or actual product samples.

SCENARIO:
  • Consumers, responding to "Mystery Shopper" reward offer in mailer, visit retail outlet and follow qualifying instructions.
  • "Mystery Shopper" identifies himself/herself with special card and awards prize to shopper, receiving signed receipt for award.
  • Increase of sales from "Mystery Shopper: stores is compared to sales data from non-"Mystery Shopper" stores, where (as a test) mailing list names not informed of "Mystery Shopper", and that area's stores not canvassed by "Mystery Shopper".
PRIZES & PREMIUMS WITHOUT COMMITMENT

CONCEPT:
A direct marketer and non-competing retailer (or retail chain) team up to use the retailer's products as prize merchandise for the direct marketer's sweepstakes and special incentive offer, without involving an up-front financial commitment for prizes or premiums.

A sweepstakes to build new customers uses the concept of "Prizes Now on Display at __________ with the retailer featuring these prizes as part of its regular merchandise display system (using appropriate promotional signage).

Concurrent with the sweepstakes is a "get acquainted" premium offer as a response incentive. The premium, one of the retailer's products, can be provided a) through the mail or, b) at the retail outlet with certificate provided through the mail. The retailer enjoys extra traffic, and the direct marketer is freed from large premium inventory costs. (Another response technique is to offer a choice of two premiums of equal value, both carried by the retailer)

The retailer is provided with a display kit including:

a) Window/wall poster.
b) Large display easel.
c) Sweepstakes entry forms.
d) Register fronter or checkout counter sticker.
e) Ad slicks/electronic media material if required
f) Information material to retailer.

SCENARIO:
  • Direct marketer's prospects/customers receive sweepstakes and direct response offer information.
  • Some prospects/customers visit retailers to see prizes; other people, interested by P.O.S. kit materials, receive sweeps entries from retailer.
  • All entries are by mail.
  • Orders from direct response offers processed, with either by-mail premium fulfilment or at retailer.
  • Regardless of premium-fulfilment method, orders by mail provide accurate accountability for direct marketer.
  • Within prizes are bounceback offers from both direct marketer and retailer.
  • Names from sweepstakes added to mailing lists of both direct marketer and retailer.
CONCLUSION
The preceding just begins to demonstrate some o1 the interesting and exciting interweaving possible with direct response and sales promotion. Since there are only three ways to increase sales-trial, larger sales units, and frequency-it's nice to know that sales promotion can affect all three, all the more so with direct response.

Over time and through expanded efforts to combine direct response with sales promotion, eventually, there will be widespread changes in point-of-sale display design, product displays media mix; e.g., television, newspaper, telephone, poster, take-ones, and in-pack offers, and product packaging, as well.

It won't be long before retail marketing understands the value of direct response as a message, while direct response marketing soon discovers the value of point-of-sale as a medium.