How to choose the right promotional mix?
Promoting the sales of products marketed in physical or digital points of sale requires combining different acquisition channels. The promotional mix, one of the four pillars of marketing mix, is used to design the communication strategy in order to make a company's offer better known to its potential customers, as well as to contribute to the brand's reputation.
Faced with the quantity of products to be promoted, retail specialists and e-retailers have to design numerous promotional scenarios taking into account several aspects: frequency of promotional offers, budgets to be allocated to markdowns, product assortments, increase in sales volumes, return on investment, etc. In order to achieve their business objectives, companies must optimize their promotional strategies to take all these parameters into account. This involves choosing the right product or product range promotion scenarios and the communication and acquisition channels to invest in for each type of reference, based on the company's historical data.
What are the different promotional methods used in the creation of promotional scenarios? What decision support tools can be used to choose the right promotional mix? How can artificial intelligence leverage the data of retailers and merchants to optimize sales promotions? We detail here all the techniques and tools to guide companies in their communication policy.
The different dimensions of the promotional mix
The promotional mix consists of the methodology or communication policy implemented by a company in order to highlight its products and services as well as to establish its reputation in a given market. The promotional mix is so called because it combines different marketing approaches targeting several levels of the customer journey or the customer acquisition journey. The techniques chosen can be ephemeral (flash sales, limited time offers, etc.) or continuous, personalized or not (TV or radio commercials for example), etc. Also, the impact of each of the promotional methods is not the same and varies according to the objective to be reached.
Communication methods can be divided into different categories: paid advertising, personalized selling, promotional sales and press relations, sponsoring, influence marketing, etc. When creating promotional scenarios, marketing teams seek to combine different promotional modalities in order to highlight an item or a product range. The approaches mentioned above are not sufficient when used alone, as they do not all play the same role with consumers. Some of them are general messages and serve to educate prospects, others will serve to build brand awareness, while a final category attempts to push customers to make a purchase decision.
The objectives of the promotional mix
The promotional mix serves different objectives at both the macroscopic and microscopic levels. Indeed, it serves both to promote the products or services offered by a company, but also to build its image and reputation over time. The promotional mix can thus be invested to improve the market positioning of a business and to make the brand better known to the targeted clientele.
In addition, some methods seek to influence the behavior of prospects, visitors or customers so that they make a purchase. The goal here is to accelerate product sales in order to limit cash tied up in inventory and avoid overstocking, among other things. Promotional mixes should also be used to find the right compromise between increasing the company's margins while optimizing prices compared to the competition. Finally, the promotional scenarios must take into account, when possible or relevant, the combinations of items to be promoted together.
The different types of communication
Advertising and paid referencing
Paid advertising can be done offline or online. It includes classic advertising channels such as TV or radio or paid search (Google Ads, Facebook Ads, etc.). In the case of radio or TV, advertising reaches a very large market segment and lacks personalization. It is also a way to introduce the brand to a new audience and to establish its notoriety.
In the case of paid search, with the advent of machine learning and recommendation and targeting algorithms (by affinity, by keyword among others), the audiences reached receive a more personalized message than in the case of offline advertising. The company reaches out to its target market. Internet users looking for answers to their needs and problems are sent the right message at the right time.
Paid advertising, even if it is used to promote a product or service, does not allow for very direct contact with potential customers because it is aimed at very large audiences.
Direct or personal sales
Direct selling encompasses all mechanisms that put the company in direct contact with a prospect or customer. It can be phone calls, exchanges in booths during events, communications via messaging services or chatbot, etc. Its main advantage is that it allows to personalize the customer experience. They receive precise answers to their questions and in line with their personal needs. However, this promotional modality remains very costly and requires a significant investment of time and human resources.
All short-term promotional activities intended to stimulate immediate purchasing behavior by customers can be grouped together under the heading of promotional sales. Flash sales, private sales, destocking operations, one-off reductions and sales are all part of promotional sales. They take place in a physical store, within the e-commerce site and generally reach a public familiar with the place of sale.
Press relations and sponsoringngPress releases, charitable actions and sponsoring allow companies to work on their overall brand image. These communication channels serve to highlight the values embodied by the structure in question. The goal is to generate a positive perception from the target market. This is done through positive actions, charity events, etc.
In addition, in the era of digital communication, other promotional methods have emerged such as influencer marketing, affiliation, social networks, newsletters, blog articles, etc. The list below is not exhaustive.
Machine learning to help companies communicate
Given the number of parameters to consider and the multiplication of communication modalities, marketing teams need decision support tools to help them choose marketing mix scenarios. Predictive algorithms from the field of artificial intelligence can learn from historical business data to generate a variety of predictions that can optimize communication operations at all levels of your acquisition tunnel. Unlike manual tools, data science applications can encompass large volumes of both historical and exogenous data, but also process data from companies and supply chains in a continuous flow (in the present). The result? Predictions of precise promotional scenarios dedicated to thousands of product references in real time thanks to the identification of patterns and trends.
Retailers and mass marketers can take advantage of this type of tool to create promotional scenarios adapted to each product to be promoted. The advantages of using this type of tool are numerous: greater accuracy, automation of time-consuming and difficult tasks for marketing teams, generation of scenarios on demand without additional costs, etc.
Artificial intelligence and enterprise data valuationThe algorithms used in machine learning take into account different data sources to enrich the knowledge of the ecosystem in which the company evolves. Historical data from manufacturers, retailers, distributors or e-tailers are used and combined with different types of complementary information.
Among the data taken into account, we find exogenous data intended to make the generation of promotional scenarios more reliable:
- competitive data;
- additional knowledge about the target market and consumer habits and behavior;
- data from the entire supply chain (suppliers, raw materials, etc.);
- information about regional and local characteristics related to each point of sale (events, festivals, seasonality, cultural particularities, strikes, etc.);
- weather reports;
- econometric data by country or region;
The success of a promotional mix requires taking into account these different parameters in order to produce personalized communication actions for each SKU or item. Artificial intelligence frees companies from generic promotional mixes for all products and points of sale by taking into account the characteristic data of each point of sale, but also of the different references sold by the companies.