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Volume 3, Number 4
May 2009 Quick links
Special Promotional Offer  Company
Mpell Solutions For Sales Support: For Marketing Support: For Redemption Support:
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How much should you spend on promotions? Most consumer companies spend between 5-20% of sales, depending on 3 factors: cost structure, number and type of competitors, number and type of consumers. Marketing a mature product with few competitors and few consumers (e.g., riding mower) requires less promotional dollars. Marketing a growth product with many competitors and many consumers (e.g., cell phone) requires more promotional dollars. How do you get the most value from your promotional costs? Consumer marketing experts know that a $100 in advertised promotional value doesn’t cost $100 per sale. The actual cost is typically between 20-50% of value, although it can be as low as 1% in sweepstakes promotions and as high as 100% in instant discount promotions. The key is understanding and consciously making the tradeoffs between advertised value, actual promotional cost, and the customer experience associated with the promotion. What promotions are most effective? The higher the effective discount relative to the purchase price and the greater the emotional value associated with the promotion, the more effective it will be. When a customer is offered a $25 gift card for $1 million mortgage refinancing, the incentive isn’t very strong. When a customer is offered $50 in grocery reimbursements for a $50 annual membership, the incentive is much stronger. And at the end of the day, the incremental lift in revenue and profit from a promotion needs to cover its costs.  To learn more about these and other great promotional ideas, visit us at www.mpellsolutions.com , email us at info@mpellsolutions.com or call 760-477-9261 and ask about the free gift with your next purchase. We’ve noticed that special incentives and promotions are taking a more dominant position in print, online, and media creative. The urgency for a truly compelling call to action is increasing in this tough economic climate.
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