Promotions are an essential part of retail marketing, but they can also affect your competitors' sales. How can you measure the impact of your promotions on your rivals and use this information to improve your strategy? Here are some steps you can follow to evaluate your promotional effectiveness and benchmark your performance against your competitors.
The first step is to identify who are your main competitors in your market segment, product category, and geographic area. You can use different sources of information, such as industry reports, online reviews, social media, customer surveys, or mystery shopping, to find out who are your direct and indirect competitors and how they position themselves in terms of price, quality, service, and value proposition.
Make sure you know your brand positioning. Looking at pricing tiers is a great way to identify brands that are positioned similarly.
Para entender a tus competidores, conoce realmente quien eres. Cuales son tus virtudes y defectos. Donde eres fuerte y donde estas débil. Has una evaluacion de ti mismo o tu producto para luego poder identificar donde estas compitiendo realmente.
The next step is to monitor your competitors' promotional activities, such as discounts, coupons, loyalty programs, bundles, free samples, or giveaways. You can use tools like web scraping, price tracking software, email alerts, or social media listening to collect data on your competitors' promotions, such as their frequency, duration, type, scope, and terms and conditions. You can also analyze their promotional messages, channels, and creative elements to understand their goals and tactics.
While it is always good to monitor competition regarding price promotion, keep in mind that their internal costs may not be your internal costs. You'll always be behind if you simply watch competitors and copy there actions and position. Think critically about your customer and the unique value that your business and capable of providing and build a promotion strategy around that. Then what info about competitors are doing can be used to adapt that strategy. It's critical to have your own course first and not simple trail behind what you are seeing in the market.
Create a competitive landscape calendar including promotional events, discounts, categories, and promo length to identify when your campaigns will face more competition (possibly higher marketing investment) and to find spots where you could run a meaningful and effective campaign without much promo competition/noise. Document competitors' promotional materials, from in-store signage to social media ads and influencer content, to analyze and identify trends, channel execution, and gain potential ideas for future iterations. Finally, use the above to join forces with merchandising and negotiate better offers from brand/vendor partners for your promotional events, especially on those trip-driver categories/brands.
The third step is to compare your sales data with your competitors' sales data to measure the impact of your promotions on their sales. You can use different methods to obtain your competitors' sales data, such as market research, syndicated data, trade associations, or public records. You can also estimate their sales based on their market share, average price, and number of outlets. You can then use metrics like sales volume, sales value, market share, or sales growth to compare your performance with your competitors before, during, and after your promotions.
Comparing sales data of the competitors will be very helpful to know how competitors are promoting their brand in the same segment to achieve their targets which directly or indirectly helps brand to strategise their marketing plans.
Keep seasonality and weekly trends of Day and Time in mind here. Many variables can make it difficult to directly compare sales performance between two periods. Be sure to isolate the promotion in terms of activity and timing as much as possible.
In my experience, retail marketers -together with merchandising- must know their numbers and use the same source of truth. Now, when it comes to comparison, look beyond your category performance. Take a more holistic approach and see how your category, adjacent categories, and total store performed in YoY, LQ, and YTD. That view will allow you to get a better understanding of how your promotion drove revenue growth from the marketplace and how it impacted sales within your store/site.
The fourth step is to analyze the results of your comparison and draw insights from them. You can use techniques like correlation analysis, regression analysis, or difference-in-differences analysis to quantify the relationship between your promotions and your competitors' sales. You can also use qualitative methods like SWOT analysis, customer feedback, or competitor profiling to understand the strengths and weaknesses of your promotions and your competitors' promotions. You can then identify the opportunities and threats for your business and adjust your promotional strategy accordingly.
When analyzing results, this is how I've done it in the past. 1. Paid media - Analyze the performance of the media channel mix from DCO to social or influencer marketing and CTV. Aim to clearly see how all channels performed during your promotion beyond impression numbers. 2. Owned media: Similar approach. However, I recommend double-clicking on e-commerce data to see sales, traffic sources, basket, size, etc., to uncover insights and potential opportunities. 3. Finally, basket analysis is critical—unit numbers, AOV, etc. You must look at all these numbers and compare them against different periods to see how your promo performed. This year, inflationary prices may be masking some decrease in units.
Setting a goal for the promotional activity is key to being able to analyze and gain a clear understanding of the impact of promotions. Specific goals like ones below can help you view promotion performance in a more actionable lens. - Unit Sell Through - Conversion Rate - $ Sales
The final step is to test and optimize your promotions based on your analysis and insights. You can use methods like A/B testing, multivariate testing, or experimental design to test different variations of your promotions, such as the timing, frequency, type, scope, or message of your promotions. You can then measure the impact of each variation on your sales and your competitors' sales and select the best option for your objectives. You can also use tools like analytics, dashboards, or reports to monitor and evaluate your promotions on an ongoing basis and make improvements as needed.
Promotions are a powerful way to attract and retain customers, but they can also affect your competitors' sales. By following these steps, you can evaluate the impact of your promotions on your rivals and use this information to improve your promotional effectiveness and benchmark your performance against your competitors.
Considering an investment in promotion like any other marketing investment. Think of it as an annual expense. Also, consider that the money spent in providing the product discount could be directly spent on other marketing channels like advertising or creative creation. When planning on how a promotional budget should be spent through the year, diversify your investment so that there is more learning opportunity instead of offering a single substantial discount event.