Types of promotions and reasons for reducing prices for goods. Audit of promotions of LLC MFO "Momento Money"
In grocery retail, we are forced to constantly organize various promotions to create a feeling of profitable purchases.
Unfortunately, retail chains can no longer refuse to increase the share of promotions for fear of customer outflow. The constant decline in prices for goods leads to the fact that stores become drug addicts of promotions, continuously increasing their share. At the same time, the business process in networks is structured in such a way that various departments are responsible for traffic and profitability. As a result, the marketing department is not interested in generating income, but strives only to increase the number of checks. And everyone considers promotions to be the magic wand for this. Just 7 years ago the share of promotion was only 10%, two years ago it was at 20%, now it reaches 35%-40%. Some categories are so dependent on promotions that their share reaches 70-80%.
How can you even imagine this? Products are sold only with a promotional discount; products are not sold without a discount. The most dependent categories include the categories detergents, powders, as well as coffee, tea, and expensive alcohol. The least committed to the impact of promotions are the “fresh” categories – with short terms storage (Milk, cottage cheese, vegetables, chilled meat, fish, etc.). A decrease in prices for a large number of goods leads to promotions becoming less and less effective, and dependence on them becoming greater and greater.
Miser pays twice. Where does the buyer overpay?
It may seem like promotions allow consumers to benefit, but this is not the case. After all, any reduction in price will be compensated by an increase in the price of the remaining assortment. And the buyer won't even notice it. After all, we are only able to remember a small amount of prices based on which we decide how expensive the store is. While the network reduces prices on these particular ones. The result is a vicious circle that is very difficult to break. Everyone wants to get the most tempting offer and, as a result, they don’t notice how they overpay for the rest.
Chains must make a profit and are simply forced to compensate for the promotional discount on a non-promotional assortment. But the thought arises - is it better to provide reasonable prices than to compensate for an insane number of discounted prices? Unfortunately, such a prospect is invisible. After all, if a network reduces the share of promotions, it risks that the buyer will be lured away by discounts in other networks. And assessing changes in the cost of the entire food basket is quite difficult for the consumer. Therefore, the share of promotions is growing, but the cost of our food basket is not decreasing at all.
By inviting a third-party agency to a promotional audit, the customer gets the opportunity to evaluate: the presence of promotional staff at all points of the promotion; correct timing of the promotion; correct design of promotional stands; availability of the required number of personnel at each point; evaluation of the promoter's work (neat appearance, the presence of a promotional form on it, the correctness of the spoken chants, a friendly attitude towards the inspector, etc.) counting the number of promotional materials on the stand and the stock of promoted products in trading floor quality of work of promoters according to the criteria specified by the customer.
promo quality assessment
More than 99% of customers for whom we audited promotional events turn to us to order an audit again, because: The presence of a huge number of trained auditors from among mystery shoppers ensures simultaneous control of the work of promoters throughout Russia. Using a special software allows the customer to receive information from all corners of the country in real time.
efficiency control
In addition to providing data on the local situation, our specialists offer specific recommendations for improving service and increasing the effectiveness of promotional events. Our auditors' visits are accompanied by data collection. The customer receives reliable information supported by photo and video reports.
Test audit
Working throughout Russia and Kazakhstan, Axiom is ready to audit promotions (monitoring the work of promoters) conducted by third-party promotion agencies. The cost of the project is calculated individually, based on the customer’s requirements. The cost of controlling one point of sale- from 180 – 350 rubles per day. Take advantage of our free offer for a test audit of BTL events. Fill out and compare the data with the report provided by your advertising contractor.
Why do you need a promotional audit?
Independent verification
When hiring a promotional agency, tell them that the audit will be carried out by an independent audit agency. Our experience shows that 30% of the staff or work that you will be quoted in the estimate was not going to be provided. There are no such points, they are closed, people are not recruited, they are sick, they are late, they leave early. And it will be possible to talk about the quality of training of promotional personnel only after 1-2 months of constant monitoring and fines.
Quality improvement
One of our clients offered to taste the mousse for children in supermarkets. 50% of promoters did not even read the brief and warning on the packaging about the presence of lactose and in case of an allergy to lactose, do not offer to taste it! After the agency's fine, the situation changed dramatically. It’s good that none of the buyers were injured before our intervention! How to evaluate the effect of our work? The promotional agency was fined, but the quality also improved.
Budget savings
Another company carried out a promotion in HoReCa - it was necessary to distribute prize T-shirts and place table tents on tables with a description of the promotion. 10% of the points did not exist! At 20% of the outlets, no one ever came, and at 20% of the outlets, T-shirts were distributed among restaurant employees, and table tents were not placed on the table... The savings for the client amounted to 50% of the budget. That is, the ROI was 1000%
It was in the last few years, due to the rapid growth of the promotion market, that the need arose to check and control the work of promotion agencies working for sales promotion at point of sale.
Why is there a control problem? The answer is simple: in sales promotion campaigns, a lot is built on the human factor. Promoters (main performers) are the main resource of the agency. Let's give some numbers.
At the Tabacex exhibition, a certain promotion agency reported that promotions for tobacco companies are carried out in 73 cities of Russia by 320 supervisors and 1,400 promoters.
In another large company, the Moscow merchandising department consists of about 60 people working only in priority stores- the rest are involved sales representatives and distributors.
About 300 promoters were involved in large-scale promotions of cosmetics manufacturers in Moscow alone. I think that these figures speak quite eloquently about the need for special control mechanisms that would check this entire mass of people. The fact is that people are the most complex resource involved in an economy. And you shouldn’t hope that this resource will generate profit on its own. The whole question proper operation with personnel during promotions is beyond the scope of this article. In this case, I will limit myself to only describing one of the aspects - monitoring the work of personnel, auditing.
An audit of promotions is needed when carrying out large-scale promotions. On the one hand, these are the direct executors - promotional agencies, on the other - their clients. These are usually large international companies- manufacturers of FMCG goods. Note that in the case of agencies, this is usually an audit of promotions, and the companies themselves order a merchandising audit. Neither one nor the other is a clear rule. The circle of customers is quite narrow: about 20 specialized promotional agencies and about 50 large manufacturing companies.
The objects of audit are:
- major promotions;
- activity large departments merchandising;
- regional BTL activity.
Let us note the fact that audit is not a punitive instrument. The audit is intended to identify the ineffectiveness of ongoing promotions and further work on errors. The audit should be viewed as information tool, with which you can obtain accurate data.
Audit objectives can be the following (from tactical to strategic):
Identifying poorly performing employees in order to weed them out.
Basically, it is set directly during a problematic promotion to temporarily improve its functioning (tactical goal). Then the audit results are provided daily in order to be able to quickly correct errors that occur.
An audit of merchandising, constantly carried out by company employees, if their salary depends on their success, can have a similar task. In this case, a monthly audit is provided for each employee (for a group of stores, so the employee himself remains unknown) and on its basis, bonuses or de-bonuses are given to the merchandiser.
Studying the situation (which is bad in general) and identifying (localizing) problem areas. As stated above, the results of the audit may influence wages employees. Of course, the most effective thing would be to find out what typical mistakes exist and what difficulties merchandisers face. Based on this, additional training is carried out, or this information may be the basis for changes in the merchandising concept.
Investigation of problems (identified problem points) in order to identify their causes. In the future, based on the detailed questionnaire, a detailed statistical analysis of the relationships between various factors and results can be carried out. It is used to identify possible causes in order to solve them more effectively.
Consulting based on audit data. This is why audits are ordered by performers (organizers) of promotions.
Of course, the question immediately arises: who will check the auditors themselves, who will vouch for their quality of work.
- Firstly, the agency can be recommended by Clients who have already undergone an audit.
- Secondly, there are schemes for double-checking the data obtained during the audit.
General idea of these schemes is to include inaccuracies in the data for auditors, knowing the presence of which, they are forced to check everything. These are “false” points, cross-validation, etc. Note that as a result of these schemes, the cost of the auditor’s work increases slightly. And this is completely justified. You have to pay for quality. One of the key points is a careful approach to the selection of auditors. In our promotional agency, auditors are allowed to work only after an interview with a recruitment manager with a qualification as a psychologist. Experience shows that this saves a lot of effort in the next stages and improves the quality of work of the entire agency. When conducting audits, it is especially important to weed out unsuitable people before they start working.
It is appropriate to note that auditors are a kind of personnel incubator. As a rule, during the audit they gain a lot of practical knowledge and learn to identify errors. They can be trusted. Of course, not every auditor can be a good manager, but someone who is not a good auditor is unlikely to get promoted. Thus, auditors are the elite among btl promotional personnel. That is why the salary of auditors should be higher than the salary of those whom they audit. I note that in this case we're talking about about the working methods adopted within our agency.
In some cases, you hear statements that it is better to conduct an audit yourself ( internal audit). I won’t argue, this has its advantages: increased efficiency, very good knowledge of narrow specifics own work. But, as practice shows, in this case the audit is carried out responsible persons companies. In this case, the audit rather acquaints the manager with the most general situation than allows a qualitative analysis of the situation. But the main objective- identification of problem points is not achieved. This requires painstaking collection of information, its prompt processing and analysis, carried out centrally by not one person, but a team. And then the “bottlenecks” become clear, identified on a sufficient amount of information and as much as possible devoid of a subjective approach. While any point of view of one person is subjective. For obvious reasons, objectivity is increased by involving external auditors who are not associated with the customer company. At the end, I’ll tell you directly about the mechanics of the work (the stages are indicated in the order they appear).
Defining goals - without them, the audit loses its meaning. Their various options are outlined above.
Objectives - detailed goals, are developed in relation to a specific case.
This requires either a detailed merchandising concept or detailed and detailed requirements for promoters. Tasks, as a rule, are individual points of such detailed programs. Data for the Client - indicators are determined that reflect the state of affairs for each specific task. The point is that indicators must be measurable and comparable, so it is thought out how to measure certain factors.
As a result, they are divided into 2 clear groups:
measured objectively and subjectively. In the first case, the number is determined by simple counting, and in the second, by rating on a 5-point scale. Data form - determines in what form the Client wishes to receive the data (tables, graphs, diagrams, etc.). In some cases this has great importance, especially when the form of data provision is important to the Client, and there is little time to provide the report. Methodology and data that are collected “in the field” - based on the data provided to the Client, a list of data that needs to be collected “in the field” and a methodology for calculating some data based on others are developed. A properly organized methodology allows you to reduce the amount of information collected and thereby reduces the error in its collection.
Questionnaire - the data is formalized in the form of a questionnaire, the methodology is finally clarified.
Writing software in accordance with the methodology, questionnaire and form for providing data is necessary for storing, accurate and fast processing of information. The availability of software is especially important for large volumes of data and large questionnaires (trade audit, merchandising check). Data collection is “field work”.
Installation of data into the database - entering personal data into the database. For greater efficiency, it is performed by a separate employee. Data processing, quantitative reporting - if the previous steps are performed correctly, it is performed automatically, except in cases where in-depth analysis is required.
Analysis of information, qualitative report, recommendations - further analysis is possible based on the quantitative report. In some cases, it is performed by the audit customer, sometimes by the contractor.
Audit is a new tool, the correct use of which improves the quality of promotions and merchandising. Therefore, its use is necessary if you want to see your BTL structure functioning efficiently.
Ekaterina Ivina General Director of BTL agency NGN Promotions
Marketing PRO Magazine, No. 6, 2007
Trade promotions or promotions sales staff companies for the sale or display (merchandising) of products of a given brand, promotions to create loyalty of sales personnel to this brand- this is one of the fastest growing areas Russian market BTL services.
Trade promotions are becoming a mandatory element of any BTL campaign for most companies. Carrying out a trade promotion campaign in support of a consumer promo event guarantees the availability of goods in retail warehouses, excellent display of this product, as well as the loyalty of sellers to this brand. According to RAMU, the volume of the trade promotions market in 2006 amounted to $400 million and grew by 25% compared to 2005.
Companies that manage a significant assortment need to take a thorough approach to planning trade promotional events, drawing up a schedule of trade promotional activity based on the seasonality of demand for the product, periods of marketing activity, etc. For a trade promotion campaign to be as effective as possible, the number of products or categories simultaneously participating in the promotion should not exceed two or three. As the number of products participating in the promotion increases, the effect of the event rapidly decreases. At each period of time, it is necessary to concentrate as much as possible the attention of the company’s internal sales personnel or personnel retail network, for which the promotion is held, on a narrow range of products.
Choosing the mechanics of trade promotional events
When planning to start trade promotional activity, it is necessary to proceed from the objectives that the company sets for itself. Each task has a specific trade promotion mechanic.
The methods for conducting trade promotional events are varied and depend on the category of product promoted by the promotion. One mechanic is effective and actively used by companies on the market non-food products, but is not applicable to the food market. The other is recommended for FMCG companies, and the third is ideal for motivation internal staff companies.
The tables provide some examples of choosing the mechanics of trade promotional events based on the objectives set by the company:
Once the mechanics of the promotion are determined, planning for the event itself begins, developing a motivation system, and selecting trade promotion tools. In order for the assessment of the success and effectiveness of the campaign to become possible, it is necessary to clearly fix planned performance indicators or KPIs (key performance indicators) in advance. Then, at the end of the campaign, based on previously established target indicators, the degree of achievement of the set objectives is assessed, and, consequently, the degree of satisfaction of the company with the campaign.
Below are some indicators for assessing the effectiveness of a trade promotion campaign that we use to assess the effectiveness of promotions carried out for our clients.
1) When conducting a promotion for staff of retail chains, we use calculations to assess the degree of attractiveness of the promotion for its participants percentage of action participants
Definition:% of sellers who participated in the promotion out of the total number of sellers in the database
Formula:% return rate = number of promotion participants / total number of sellers
In our experience, this figure ranges from 20 to 55% and largely depends on the mechanics of the promotion, its availability, and the attractiveness of the incentives.
2) to assess the overall financial performance of the stock, a standard indicator is used ROI (return on investments)
Definition: The ratio of the total net profit received as a result of this action to the cost of this action
Formula: ROI = ((actual sales* - planned sales) X margin - promotional costs) / promotional costs
The indicator should not fall below 0 (break-even point). It is necessary to strive for an indicator >1 (i.e., every 100 rubles invested bring an additional 100 rubles).
This calculation should ideally be carried out on the basis of sell-out data (sales to the final consumer), and not sell-in (sales to distributors), since under the influence of such promotions, distribution overstocking often occurs.
When calculating sales as a result of a promotion, it is necessary to exclude such factors as market growth, the effect of advertising campaign or consumer promo promotions, etc.
3) The simplest method that allows you to assess at first glance whether the costs of the campaign were justified - simplified performance assessment
Definition: comparison of 2 indicators - ratio real sales to planned sales and the ratio of the spent budget to the budget planned for this event
Formula: Actual/Budget X 100< = >Cost/Budget per share X100
4) When planning any marketing event it is extremely important to plan correctly inventory. Despite the obviousness of this fact, in approximately 30% of all promotions we carry out, we are faced with the problem of a lack of inventory on the part of the client, which ultimately negatively affects the result of the promotion. When summing up the results of the action, it is important to assess the influence of this factor on the overall result of the action. We use the indicator Out of Stock Ratio.
Definition: The number of days when the product was out of stock compared to the total number of days of the promotion
Formula: OOS Ratio = Number of SKUs* OOS X number of days OOS**/ total number of SKUs* X total number of days of promotion
When conducting trade promotional events, it is very effective tool checking the quality of the promotion, as well as the main tool for assessing the work of the personnel participating in the promotion, is the mechanics of the mystery shopper. In some cases, especially when carrying out large-scale actions, this method is the only possible one. This verification system is often a necessary element of the promotion, since it allows you to regularly and objectively evaluate the activities of trade promotion participants. On the part of sales personnel, confidence in promotions that include such verification mechanics as mystery shopper usually increases, because the verification is carried out by a third-party organization - an agency organizing a trade promotion event, according to clear, pre-known and understandable criteria.
Trade promotion is definitely important and very effective tool modern trade marketing. But, as is the case with any other type of marketing activity of a company, this activity requires thorough planning, clear goal setting, as well as scrupulous calculation of the effectiveness of the event. A stock that seems successful at first glance may turn out to be unprofitable upon closer examination.
In conditions of fierce competition, companies conducting active trade promotional activities, caring about high level motivating your sales or retail staff trading network, have a significant advantage over their rivals. In some sectors of the market, companies are already competing with each other in a creative approach to ongoing promotions, the level of technical support events held, the degree of interest of sales personnel participating in similar actions. Today, the trade promotion market is growing and developing at a rapid pace. And how successfully your company is able to use this tool in its activities will largely determine its future position in the market.
