For Better Retail Promotions, Ask These Questions

  • Written by Super User
  • Category: News

Discounts and promotions are at an all-time high, often comprising the single-biggest cost within many retailers’ P&Ls. Yet despite these high stakes, and the growing adoption of sophisticated analytics, many retailers continue to take a broad-brush approach to running promotions that results in missed sales and profits.

The most common explanation for this lack of precision is that retailers tend to evaluate promotions at a high level, without drilling down to understand the impact of individual tactics within each promotion. By this, we mean they compare the overall event to last year’s promotion in aggregate without understanding how different parts of the promotion might be more or less successful; getting the mix right is the key to creating more impact on sales and profits.

The good news is that many large retail organizations already have the tools and data they need to craft more effective promotions. What they lack, more often than not, is a logical way to structure their promotional effectiveness analysis. The solution can be found by asking a series of strategic questions, then carefully parsing the data for the answers.

When are discounts most likely to stimulate a sufficient sales response?

Promotions vary in effectiveness depending on the time of the year, key holidays, and even the day of the week. Retailers who have a firm grasp of how their customers shop during different periods can use this information to formulate more precise promotional strategies. For example, during certain holidays — Christmas, Valentine’s Day, Mother’s Day, etc. — consumers tend to be in active shopping mode, and retailers should structure their promotions accordingly. Recent analysis for a leading apparel retailer showed elasticity of customer response to promotional discounts was up to three times higher during holiday periods than during non-holiday periods and two times higher during weekends than on weekdays. Given this, you’re almost certainly throwing away sales and margin dollars by not tailoring your promotions to time periods.

Furthermore, retailers should use this insight to educate themselves on when aggressive promotions are a waste of effort and valuable margin dollars. If your typical customers have traditional work weeks, it’s very difficult to entice them into the store for an unplanned purchase during the week, regardless of the type of promotion. Therefore, rather than trying to use steep promotions to drive traffic on weekdays, use more strategic promotions to encourage consumers who are actually in the store during the week to fill their baskets.

Does the promotion work best in-store or online?

It’s important to structure promotions based on what works best for a particular channel. Our recent work in women’s fashion suggests more complicated promotional structures aimed at basket-building — such as buy one item and get a second at a discount — work far better in-store. Simpler promotional structures — such as an off-the-top 20% discount — tend to yield better results online.

What products are most likely to garner more response when promoted?      

Not all items a retailer sells are created equal. Some have higher elasticities or stronger pricing power. Certain items that are on promotion will be especially effective in driving traffic, while others are better used as basket or margin-builders. For example, our analysis in the men’s apparel category shows that, compared with everyday basics, promotions for in-season fashion items bring significantly more people into stores. The same is true for lower-ticket sub-brands and product lines at aggressive price points.

At the same time, retailers need to be aware of the signals they send to consumers when deciding which items to promote and how often. Understanding which are your strongest or marquee items, brands, and product lines is essential, because you could easily erode their value by over-promoting them. Promoting too frequently may cause consumers to equate your brand with low prices, which is probably not the profile you want to communicate unless you’re a low-cost retailer.

How does response vary across tactics (discount depths and promotion structure)?

 

Promotions comprise a rich set of tools, and it’s no longer enough to just pull out a hammer every time there’s something that needs doing. Instead, match the tool to the job, making sure your promotional structure is aligned to your desired outcome and the manner in which your customers shop. For instance, if you’re trying to build basket size, more complex, tiered promotions — such as giving increasing discounts for each subsequent item purchased — may be a better way to go. Co-promoting the right items across the store, and knowing which promotional levels are too deep or not deep enough, will further help drive sales and improve profits.

Who is most likely to respond (e.g., new versus existing customer groups)?

Most retailers have a vision that a customized promotions strategy — one that optimizes promotions for every consumer — is the future. But for major marketed promotions, that’s not always achievable or practical. Nevertheless, you need to make sure that your efforts target your most important customers who can ‘move the needle’ — either those who drive the most sales or the ones who are the most profitable. Companies now have the data and analytic power to create specific customer profiles at relevant group levels — for example, loyalty members or top customers, or those who tend to purchase on certain occasions or within certain categories — and craft promotional offers tailored specifically to these groups.

Getting promotions right

Savvy retailers now have the tools to build their promotional calendars from the bottom up, eliminating wasted promotional dollars and moving from scattershot decision-making to effective actions tied to strategic objectives (e.g., driving traffic, building basket, driving sales and profit). Our experience suggests that retailers can find roughly 400 to 700 basis points of incremental margin dollars by deconstructing and deploying promotions that are strategically designed, targeted, and timed.

Of course, the most effective promotional strategy will differ for each retailer, and must account for many things, including the intended value proposition, competitive position and pricing power, and the specific consumer segments served. But through data science and a careful, strategic approach, retailers can solve the promotional Rubik’s Cube and unlock substantial value. - Harvard Business Review, JOHN RIZZO/GETTY IMAGES 

Related:

A 17 year Old Kenyan is Making Over $40,000 Revenue With An MIT Endorsed Technology

  • Written by Super User
  • Category: News

 

At 17 and not yet out of high school, Tom Osborn—an entrepreneur from Awendo, Kenya, with a passion for clean energy and technology—had an idea that could change the life of many Kenyans. Having seen how deforestation to create cooking fuel resulted in suffering fromsmoke inhalation, he came up with a solution: a “clean charcoal” briquette.

His idea won a $3000 innovation grant in 2013, and shortly after, withIan Oluoch, a schoolmate, Osborn founded Greenchar—a company that produces briquettes made with sugarcane waste, for household and industrial use. Shortly after, Osborn and Oluoch were joined by a third partner, Yina Sun, a student at Chapel Hill University in Chapel Hill, North Carolina.

Flash forward 18 months, and the company has 10 full-time employees and 15 part-time salespeople who get its products to 3,000 homes and 20 companies. Since February 2015, the company has sold about 130 tons of briquettes.

With an overall investment of $210,000, Osborn said in an interview, Greenchcr has generated $40,000 in revenue, selling to pilot projects in rural areas in the southwest of the country, and in two urban slums in Nairobi. The products for household use, branded as Maaka Poa (cool charcoal), are sold by kiosks run by locals, are providing employment and revenue for the communities.

 

Most Kenyans use charcoal or firewood to heat their cooking stoves. Maaka Poa, Osborn says, is both better and cheaper. A kilo costs $0.3, versus $0.5 for firewood or charcoal. The briquettes burn longer, adding to the savings. “We understood that [for customer] the main proposition is price, not health,” Osborn said during the Women Deliver conference in Copenhagen, where he won the Social Enterprise Challenge.

In Kenya, 75% of the population uses charcoal, firewood or biomass to operate their stoves. This not only creates pollution, but depletes natural resources, as increasing quantities of wood are required to satisfy demand.

The product distributed by Greenchar is an adaptation of an MIT technology (which has been developed together with Takachar, an MIT-based company) and Osborn says similar products are available in Uganda, Tanzania, and India. In Kenya two competitors sell recycled charcoal dust—a product still linked to wood and with lower environmental and health benefits. According to MIT studies, the “clean charcoal” results to 70% less smoke inhalation than charcoal, and up to 90% less than firewood.

Greenchar plans to expand its range of products as well as its distribution, selling to more places in Kenya as well as in Eastern African countries. The company also plans to produce a cooking stove that works more effectively with Maaka Poa.

Osborn hopes that clean fuel will be used not just for cooking but to generate electricity. In the absence of reliable electricity, he says, “families in Kenya still use kerosene for lighting.” It’s his mission—and business goal—to change that While Osborn, who is not 20, was accepted into Harvard, he says has no intention of diverting his attention from Greenchar. “I’ll go, eventually,” he says. -Quartz Africa

 

More African Stories: Africa's first tablet for schools

 

 

 

I.K Adusei To Publish Second Book II Special Feature

  • Written by Super User
  • Category: News

In his latest book soon to be unveiled, titled How To Start Small: Financial Skills For Business Success, I.K Adusei had this to share:

The greatest lie ever told by people especially many below the ages of forty and fifty is that one day the goddess of good fortune will cross their path and suddenly everything they touch will turn into gold.

Many people believe in this lie. They therefore continue to hold back, expectant of the day the goddess of good fortune will finally cross their path.

The greatest truth is that, man is in control of his own destiny. You may decide to wait for one day to be successful or to take today as day one to make a step to creating your own destiny.

This book, How To Start Small by I.K Adusei will set you on the path to entrepreneurial success. In the covers of this wonderful piece are the lessons, stories and strategies of highly successful entrepreneurs in today’s world.”

– How To Start Small: Financial Skills For Business Success

 

The Author, I.K Adusei is a serial entrepreneur. He is Founder and CEO of The ABN Organization, a holding company with interest in real estate, multimedia, retail and commerce.

As a streetwise serial entrepreneur, he took delight in economics in his Senior High School days in Prempeh College, Ghana, and went ahead to study Spanish, Psychology and Political Science in University of Ghana to widen his world view and give him a cutting edge appreciation of life and business across various disciplines.

His first book From Nowhere To Somewhere was reviewed live on Ghana Television (GTV) in 2013 at the age of 24 and went on to make several hundreds of thousands in sales, resulting in an impressive readership globally.

He is husband to Mavis, a passionate Pharmacist (Pharm D) and a mother of their adorable 11/2 year old daughter Nhyiraba.

How to Start Small: Financial Skills For Business Success is due to launch in few months. You can't wait to grab a copy!

 

 Related:

Excerpt: How To Start Small by I.K Adusei || Special Feature

  • Written by Isaac Kwasi Adusei
  • Category: News

 

From his ground breaking book soon to be launched, How To Start Small: Financial Skills For Business Success, I.K Adusei shares an exclusive excerpt.

Know that as an entrepreneur you only have yourself to impress.

Entrepreneurship is not a popularity contest. It is not an arena for the display of wealth, neither a competition for who is who in the world of business. It is far from it.

Jeff Bezos is the richest individual in the world today. His real time net worth as I write today stands at USD $ 163.3 billion, checking from Forbes real time rankings. As of June 2018, his net worth was $112 billion, checking from the same sources. His closest ally Bill Gates has a real time net worth of USD $ 95 billion.

It is likely you may not have heard of this till now. Jeff Bezos is the Founder of the e-commerce leviathan, Amazon. He foundered Amazon from his garage in Seattle, USA on July 5, 1994.

Over the years Amazon has been engaged in a massive recapitalization exercise mainly using retained earnings from the company. This meant that, the company was reinvesting its profits to create more cash flow and develop its systems. Shareholders were therefore not making profits for years since the company was unable to declare profits.

Jeff Bezos was missing out from Forbes list of top 5 richest men in the world for several decades till the year 2016 and 2017.

In 2018 he emerged as Forbes Richest Man overthrowing Bill Gates whose net worth stands at $USD 90 billion as at June 2018. Jeff Bezos is the first person ever to exceed the net worth of USD 150 billion in the 3 decades of Forbes operations.

 

Keep a low profile just to be able to increase your assets and create more cash flow which will create more cash flow. Many people who are expectant of you keeping up with the Joneses will decide to ridicule you, but always bear in mind that, entrepreneurship is not a popularity contest. You have but yourself alone to impress. Keep this in mind and go for gold. There is no time to impress people whose predisposition have always been that of hatred and envy. The world is yours if you are able to do this! Go out there and make yourself proud. To be continued...

 

Related: 

 I.K Adusei To Publish Second Book II Special Feature

Steps in creating your vision map

  • Written by Isaac Kwasi Adusei
  • Category: News

On the first page write the most important area in your life or the most important dreams in your life. This should be in sync with that of your partner. Write what you really want to achieve in life as an individual and as couples.

On the next page, summarise each dream into one or two sentences.

Then you create a page for each goal. On that page you list the steps that you have to take to achieve that goal and which role each partner has to play in achieving the goal.

Next, you take any complex step in the list and list the steps you will have to take to complete the task.

Then attack completion dates to each task. So that as you complete the steps you achieve the goal. And you will have to write them down, if you really want to achieve the goals. It doesn’t matter how it takes you to write these down but if you really want to achieve great things in life then you have to write them down. When you do this together, you both have a mission besides just the marriage or relationship you have. You have created something to work together for. There is something to achieve which both of you would be happy to have. As you both follow the steps and achieve the first dream, it gives you more hope to work together towards achieving the others. Put all the negativities walking into your mind now as you read away. Be positive, and trust that you both will follow and have them done; after all you put them together yourselves. Just do your part and let each person do his or hers, do not defer your partners hopes by not playing your role. If you do so then you do not want the dreams or the vision to be achieved.

The Reasons for gaining true hope

Hope is that confident belief that you have a specific vision, goal, desire or a promise and it will be achieved or fulfilled within a specific amount of time. When you have true hope, it becomes the fuel that keeps you moving you towards the ultimate fulfilment of that vision and each step you complete increase your hope and drives you even more powerfully towards the ultimate achievement of that vision. So true hope helps you to achieve our dreams.

A vision without true hope has no power and has no chance of being achieved. Without hope the vision dies.

What can we do to have hoped to achieve our vision?

The vision mapping process gives us hope to see our destination clearly and we see a map of how to get there, sustaining that hope keeps us on track. If you fail to keep that hope then your vision will be defined as Solomon said in proverbs13:12-Hope deferred maketh the heart sick, but when the desire cometh, it is a tree of life.

The core of your emotions get sick, you lose your joy, and then lose your energy, you lose your motivation, and your creativity goes down. You just give up your dreams. You just live, what a waste of life. If you succeed in your business and fail in your marriage, you are not successful in anything. So if you over concentrate on achieving business success and your wife and children are in a mess, they don’t even see you, they do not have quality time with you, you have achieved nothing. To be successful your family should be intact and happy just as you do well in your business. What will be the use of all your business success when your family is broken as a result of trying to succeed in your business? You need that balance in vision mapping process.

Don’t also defer the hope on your partner, when you do so it is like adding poison to your partner’s meals and it will make them sick. They will lose their joy, trust and cannot commit to the relationship. And again their motivation will begin to die.    - The Mirror

 

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