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If you ask category managers what causes them the most stress in the consumer product supply chain, there’s a pretty good chance they’ll tell you “promotion management”.
From fast food giants to retailers and fashion brands, promotions are used in a wide variety of industries to make sure that companies hit their quarterly and annual targets.
But all promotions aren’t the same. In fact the most effective promotions throughout history have been those that have changed the game of promotion management. Which means that today a promotion can take a number of different forms such as price reductions, seasonal sales, limited time offers or even in-store sweepstakes.
Promotion management, or campaign management as it is sometimes called, is the act of managing product discounts or offers. While this may sound simple it involves a lot of cross team collaboration, usually between marketing, sales and category management.
While category management and sales will usually decide on offers and promotions based on inventory, season and budgets, marketing and sometimes even external production agencies will need to get involved to create the promotional material required to pull off a successful promotion round.
To find a true masterclass in executing a promotion we don’t have to look further than global fast food chain McDonald's and their Monopoly sweepstakes which has helped the company increase their annual sales by as much as 40%.
The McDonald's Monopoly has run under different names in a wide variety of countries since 1987. Through the years the prizes have ranged from free menu items, to real estate, and cash payouts of as much as 5 million dollars. And all customers have to do is collect the appropriate Monopoly promotion pieces—which come when you purchase specific items in their restaurants.
They don’t do this out of the good of their hearts either. The original Monopoly promotion is said to have boosted restaurant sales with more than 40%
And the returns on the promotion are still substantial to this day. Even after the McMillions scandal of 2001, which led to a full scale FBI investigation, and multiple arrests after it was revealed that a ring of external conspirators had rigged the system and made off with 24 million dollars in cash prizes between 1987 and 2001.
Since then the Monopoly promotion has gone digital, and is now run through their app, but the concept remains the same. When you buy certain menu items, you get a ticket which can be worth anything from a small bag of fries to a million dollars. And while the reported success of the monopoly rarely reaches the 40% increase in sales that the 1987 version saw, it has helped the brand increase sales even through covid and lockdowns.
When we talk about seasonal promotions it’s only natural to think of Christmas specials or Black Friday sales, but if we’re looking for a true masterclass in seasonal promotions we need to turn our attention to the season of fall.
And, you probably guessed it, the pumpkin spice latté that Starbucks brings back every Labor Day to provide all of us with that wonderful taste of seasonal depression (just kidding).
Starbucks launched the pumpkin spice latté in the fall of 2003, and since then the seasonal drink has been brought back every Labor Day. In the first decade of the drinks life, Starbucks is estimated to have sold more than 200 million cups of pumpkin spice latté, and while they don’t break down their earnings based on drink types, we can expect the company to make more than $100 million from the pumpkin-y drinks this fall.
And while it all started with Starbucks, other companies like McDonald'ss and Tim Horton’s has since followed suit, which has grown the pumpkin spice industry into a $500 million industry.
Not bad for a seasonal promotion, huh?
But the true brilliance of the pumpkin spice fall promotions is two-fold. First there’s the scarcity aspect. You can buy the drink from Labor Day until November 1st and if you miss your chance you have to wait until next year. Secondly, there’s the lack of competition.
When Starbucks launched the promotion in 2003, their competitors were preparing from Halloween promotions, Black Friday and then Christmas. But Starbucks? They made autumn a season to celebrate, and positioned themselves as the queen of autumn drinks.
The Prime Day promotion is without a doubt one of the most successful cashback promotions of recent years. This becomes evident when we start looking at the sales numbers of this promotion.
In essence, Prime Day is a membership promotion that takes place over the span of 24 hours days. In 2024 it took place from 12 PM July 16 to 11:59 AM July 17.
Over the course of Prime Day, Amazon Prime members get exclusive deals on a wide variety of products, which has a huge impact on their sales.
For instance, in 2024 a Fitbit, which usually sells for around $150, was reduced to $99 for Amazon Prime members.
And the result?
The numbers kind of speak for themselves.
Now, you could be forgiven for thinking this was a fluke tied to the fitbit and not something that had to do with the entire promotion, but that would be wrong.
A set of Taylor Made golf balls had a price drop from $42.99 to $33.99 and the results were again quite impressive, with the number of units sold increasing by 6x within the 24 hour period of Prime Day.
Again, you may focus on the fact that these wares have reduced prices, so of course the sales are going to increase. But it’s not just the items that go on sale that see an increase in turnover on Prime Day.
An interesting example is this indoor garden, which actually had a higher price on Prime Day than it did on other days, and it still saw an increase in turnover, even though it had a price tag of $119.99 on Prime Day compared to an average price in 2024 of $81.53.
This just goes to show that getting customers through the door or on to your site with one good offer, can do a lot to increase sales in other departments as well.
At least it did for Amazon, who ran a record breaking promotion on Prime Day 2024 where sales reached $14.2 billion, which was an 11% increase compared to the year before.
It was also the biggest sales day of the year for third-party sellers that use the Amazon platform, who collectively outpaced Amazon’s own retail business.
Stimulating the sale of a specific product or product category is an essential part of retailer promotions. This is usually achieved through promotions that showcase particular items on offer, in an effort to spark interest, ignite purchase decisions, and drive product turnover.
But this is true for any business.
In a tech company the promotion of a new smartphone, for instance, would be focused on increasing the sale of that specific product.
And in a consultancy firm promoting assistance with annual reporting would be focused around getting clients to increase consultancy hours during reporting season.
In both cases, the promotion is carried out to increase the sale of a specific product or offer within a specific time frame, usually towards the end of a quarter to improve reporting figures or leading up to a seasonal event, like Christmas or when companies need to finish up their annual reporting.
But in retail promotions are not only used to stimulate the sale of a specific product or product category. Promotions are also used to increase sales in a broader sense. Some promotions are simply carried out to get customers through the door.
This is why you may see promotions advertise an item at a loss, because the retailer is banking on making up the difference on the sale of other products in the same purchase.
There’s a reason most category managers mention “promotion management” as the thing that causes them the most stress in the consumer product supply chain. It’s because it is complicated.
And especially if you are new to promotions either from a marketing, pricing or category management perspective, there’s a lot to gain from covering your bases. So, to help you we’ve put together 5 steps to help you on your way to flawless promotion management
It helps to have a clear goal at the very beginning of your promotion. Is your goal to increase sales? Are you trying to break through on a new market? Do you want to improve customer satisfaction?
Whatever objective you have it helps to define it as a SMART goal, meaning that it needs to be specific, measurable, achievable, relevant and time-bound.
Not every promotion is aimed at every customer you’ve ever had. Take the annual pumpkin spice latté promotion that Starbucks runs, or the McDonald’s Monopoly.
Their promotions have been focused on narrowed down audiences like women aged 18-35, or families. And this has let them tailor their messaging and channels specifically to the customers they want to target.
When running a promotion it is important that you select the right mix of promotional tools to get your message across to your target audience. What the right tool is ties back to your target audience. For some audiences digital marketing might be the best approach, while you may see better results with direct marketing plays and TV commercials for other audiences.
It really is true what they say: Everything is content. And you need to make sure that your content fits your audience.
The work doesn’t end when you’ve launched your campaign. You need to keep a close eye on performance and assess the viability of your promotion throughout its entire run. How is the social media engagement? What does the website traffic look like? How are the sales?
Whatever goals you set at the beginning, you need to keep an eye on them now.
After your promotion ends you need to analyze the results of your promotion, decide what worked well and how you can improve for your next promotion.
An often overlooked challenge in promotion management has to do with forecasting. This is because a lot of companies forget to separate promotional sales figures from their regular sales figures.
And the problems caused by this doesn’t just affect category, pricing or marketing, it affects the business as a whole, because demand spikes generated by a specific promotion will end up skewing forecasts after the promotion is over.
Or said in a different way, if Amazon forgets to remove the data from Prime Day sales when they forecast for the following quarter, their forecasting will be off by not just a little. It will be off by A LOT.
So what you need to do is go to whichever promotion management solution holds your sales data, and then do the following two things:
So, while this is a simple thing to do, it can have a HUGE impact on your forecasting accuracy.
While most key business processes have been moved to dedicated systems, promotions often exist in a collection of Excel spreadsheets, and the first step towards making your promotion management better, is to remedy that.
Of course connecting everything from digital assets and product information to planning, proofing, and print in one dedicated system will help improve your overall promotion management, but you also need your system to be able to connect the different teams that have a stake in your promotions.
There’s little point in centralizing the digital asset management for your content and marketing teams if they still need to export files and send emails back and forth with pricing and category management during the proofing and review phases.
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