What are the key factors to consider when setting your promotion budget and objectives?

"A deep understanding of the market landscape drives effective promotion strategies." In the home appliances industry, when setting the promotion budget for a new energy-efficient refrigerator, we thoroughly analyzed market trends, customer preferences, and competitor activities. This ensured that our promotional efforts were targeted and impactful 1) Conduct a market analysis to gauge size, growth, and customer preferences. 2) Benchmark against competitors to understand their promotional strengths and gaps. 3) Align promotion objectives with desired market share and sales targets. In conclusion, a well-informed promotion budget and strategy allow you to capitalize on market opportunities & effectively position your product.

Analyze the market/channel/audience you are going to compete for. There's always going to be a budget limit - even if the question implies otherwise, and the lower that limit is, the quicker you can decide which channels are actually going to be worth it and within the budget. After you have determined this, you can allocate the budget for the channels according to your objectives because not all channels are created equal, and the rule of thumb to allocate 60% of your budget towards brand building and 40% towards activations still applies unless specified otherwise.

My number one objective when working with an emerging brand is always to increase the sell-through rate and generate repeat purchases. The proof is in the numbers, so I always conduct some analysis on the market, aiming to perform as well as, or better than, the category leader. Proof of concept can be demonstrated through competitive velocities achieved during promotional activities, and more importantly, AFTER the promotional period. Defining this objective with a measurement is straightforward; sell-through rate before during and after promo. Message me if you want details, I'd be happy to chat.

There is a sentiment that promotions are a bad thing because they mess up the forecast, cause price disputes and erode margin. That is nothing to do with promotions per se but to do with bad management and bad processes. Think strategically about promotions and execute with tactical brilliance. Pricing disputes come about because we let them with bad record keeping, poor data entry and terrible communications (usually)

When I was in retail, we used a combination of advertising, sales promotion, and personal selling. This beverage alcohol-focused retail store utilized traditional advertising methods, but after much convincing, I was given a budget to integrate a digital marketing strategy. Timing was a key element, as our market was very seasonal. Different strategies were used in the summer (more of a digital focus for people visiting and looking up where to go online) than during the winter (a more traditional focus to engage with the local community). Marketing is not a one-size-fits-all approach; it depends on which part of the supply chain you operate in and the size of your company. Always stay innovating and experimenting.

Budget allocation for promotions is crucial, but it's equally essential to have a clear post-promotion analysis before making any decisions. Surprisingly, many companies tend to overlook this step in favor of constantly planning the next period and promotion. With the progress of AI-driven Trade Promotion Optimization (TPO), we have a powerful tool to make informed decisions. In this context, TPO becomes more critical than ever, as it prevents promo budgeting from relying solely on instincts and it provides data-driven promo and budget recommendations based on the successes and failures in the past.

Do not do last year+plus. It is lazy thinking. Instead look at how consumers are shopping, how the category is evolving, what you want to achieve and go from there

Brands can create urgency in promotions using these strategies: - Limited-Time Offers: Short-term sales encourage quick action to avoid missing out. - Scarcity Tactics: Highlighting limited availability or low stock can prompt faster purchases. - Tiered Offers and Early Access: Offering different levels of discounts or early access to subscribers builds excitement and urgency. - Countdowns: Using countdowns for sales events increases anticipation and pushes consumers to act before time runs out. - Reminders and Notifications: Send reminders through email and social media to keep promotions top of mind. - Snooze Option: Allowing consumers to delay a promotion offers flexibility while still encouraging timely action.