An analysis of the success of a promotional plan depends on its objectives. Revisions should be made if pre-set goals are not achieved. Here are some ways to test the effectiveness of a promotional effort:
Testing the effectiveness of a promotional effort.
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Examples of Retail Promotion Goals |
Approaches for Evaluating Promotion Effectiveness |
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Inform current customers about new credit plans; acquaint potential customers with new offerings. |
Study company and product awareness before and after promotion; evaluate the size of the audience. |
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Develop and reinforce a particular image; maintain customer loyalty. |
Study images through surveys before and after public relations and other promotional efforts. |
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Increase customer traffic; get leads for salespeople; increase revenues above last year’s; reduce customer returns from prior years. |
Evaluate sales performance and the number of inquiries; study customer intentions to buy before and after promotion; study customer trading areas and average purchase; review coupon redemption. |
Although it may at times be tough to assess promotion efforts (e.g., increased revenues might be due to several factors, not just promotion), it is crucial for retailers to systematically study and adapt their promotional mixes. Walmart provides suppliers with store-by-store data and sets upfront goals for cooperative promotion programs. Actual sales are then compared against the goals. Lowe’s, the home centre chain, applies computerised testing to review thousands of different ideas affecting the design of circulars and media mix options. In a suburb of Minneapolis, Supervalu runs a ‘lab store,’ a model store not open to the public where the company can test how new products look on its shelves and experiment with seasonal displays. Retailers such as Kohl’s are testing the effectiveness of newspaper circulars versus digital flyers on in-store sales and profitability.