Winter sales are slowly coming to an end. By lowering product prices after Christmas, shops want to offset the effects of the traditional January trade slowdown. And they're right - nothing works like price promotions on consumers. Provided, of course, that they are well communicated. Planning a sale is not simply a price reduction," Simon-Kucher & Partners experts emphasize.
- Poles very willingly use price promotions. This is due in part to our nature. We are looking for an opportunity, a treat, we feel good if we find a product at an attractive price. It is said that Poles are very prone to remember prices, which makes them clever consumers. They know very well what products to buy at a given time and in which store. This is a feature that distinguishes us from other European countries," says Newseria Biznes Tomasz Stec, director in Simon-Kucher's Warsaw office.
According to a survey by KPMG, published in December 2017, 49% of Poles delay purchasing until promotion. Half of the respondents admit that they bought an additional item precisely because it was covered by the promotion. For 76% of Poles, an attractive price is the main motivation to buy products during the promotion.
- Consumers don't like being cheated, they don't like buying products in pseudo-promotion. If we already apply a price reduction of up to 70%, a significant part of our range of products should actually be included in such a reduction. The customer will not like the situation in which almost all products will be overestimated by 10 percent, while only a very small part of the products, in too large sizes or in unattractive variants, will be overestimated according to the announcement - says Tomasz Stec.
Integrity in communication is not the only issue that companies should consider when planning sales. The second important issue is to present the discount properly - so that the customer can see how much he gains.
- When planning a price reduction, the most important thing is to determine what the amount of the reduction should be - adds Tomasz Stec. - However, the appropriate promotion marking is very important. From our experience we know that it can even strengthen the effect of promotion several times than if there was no such strong message.
Reduced prices should also not exceed certain psychological price thresholds - that's why the famous 99 grosz ends are so famous. The experts emphasize that the price of 9.99 PLN is much better for customers than 10.20 PLN - even though the difference is minimal.
- We should very clearly show customers the benefits of buying a promotional product, i.e. not only the new promotional price, because they do not need to know the old one. A very strong element is to show the level of discount by the percentage by which the price has changed, or the value in PLN by which the price has decreased. It is an additional incentive for the customer to realize the attractiveness of the promotional offer - explains Tomasz Stec.
The KPMG survey shows that the price is most often decisive for the selection of a particular seller. This is the most important factor for 83% of respondents. Nearly every fourth respondent is guided by the seller's brand when making purchases. For one in five consumers, positive experiences from previous purchases are a factor that helps them to make a decision about choosing a particular seller.
Promotions can drive sales and attract new customers to the store, but everything must be carefully planned.
- We have to start with planning goals and promotion strategy - explains Tomasz Stec. - Each company should stop thinking of promotions as certain events that need to be planned in the short term and prepare a long-term promotional strategy that corresponds to the company's strategy and overall objectives. This strategy should determine to which groups of customers these promotions are targeted and which product categories we want to support sales by planning promotions.
Particular attention must be paid to this by trading companies and FMCG manufacturers, who have a broad product portfolio. Some goods do not work well in promotional campaigns.
Another important element of the strategy is the choice of the type of promotions that the company wants to carry out - whether it is to be a simple price reduction or the so-called bundling, i.e. combining products in promotional sets, or maybe an additional gift product that will make the purchase more attractive to the customer. The choice of both the scale of the reduction and the type of promotion and the way it is communicated to customers should depend on what the company wants to achieve through this promotion.
- We need to consider whether we want to increase the value of the shopping basket of customers who already come to our store, or whether we want to attract new customers by promoting them. This determines, for example, whether the communication should be outside the store or inside it - says the expert.