The next area of review that a business will focus on is promotions. Nowadays, promotions are just about everywhere and they’re very much expected by consumers, many of whom will only buy certain items when they’re on offer. When reviewing your promotions, you should be working to identify which are the most effective and generate the best return on investment, or ROI.

Many businesses take an integrated approach to pricing and promotion. By having a view of their own brand performance and how key competitors are performing, they can set prices for their everyday non-promoted items, as well as those on promotion - and then optimize those promotions by targeting different channels and groups of consumers. An effective net revenue management approach can therefore help businesses think about how to leverage promotion more strategically.

To build a successful promotion strategy, a brand or business should begin by assessing the current promotion landscape of the category. They should assess promotional trends and understand if promotional levels are increasing, decreasing or flat. Do promotion trends appear to be more focussed on the volume or number of units sold on deal, or on the size of the discount? And, are these trends being driven by retailers, shoppers - or both?

You should also begin to develop an understanding of the different roles promotions play at different retailers. For instance, if you’re looking at promotions in the laundry detergent category, you might find that while discounters prefer promoting smaller sizes at lower price points, grocery stores tend to promote mid or large sizes. You’ll also need to consider the cost of these promotions. Does the amount of money invested in a promotion on smaller sizes of detergent deliver the same ROI as promotions on larger sizes?

Once you’ve assessed the landscape, you can begin defining the role that promotions will play in delivering your brand or business objectives. Think about the consumer behavior that you want to incentivize with promotions…

Do you want to encourage shoppers to trial your product and therefore bring new shoppers to your brand? Or, do you want to incentivise existing consumers to purchase a product they’ve bought previously, either by encouraging them to buy a larger pack size or by selling them multiple units of the same product?

Promotion