The Power Of Promotions

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The promotions industry in the United States is big business. Every year, brands and retailers spend over $100 billion on promotional incentives designed to capture the mindshare of consumers and motivate them to act.

Through promotions, brands are able to negotiate better shelf space in big-box retailers and set their product apart from the competition. Promotions help them drive brand awareness and capture customer information for ongoing CRM. The bottom line: promotions help brands drive sales.

Untapped Potential

But while brand sponsors have long recognized the power of promotions, many of the benefits that can be derived from the promotions industry have gone largely untapped.

What most product suppliers fail to realize is that the promotional medium can serve as a catalyst to quickly educate consumers about a new product, vastly increasing the product’s chances of succeeding in the retail market. They don’t consider that promotions can serve as a powerful customer acquisition tool and are more effective and inexpensive than virtually any other solution around. Perhaps worst of all, they don’t make the connection between their product and the enormous revenue stream they could generate by marketing their products to the promotional industry.

Educating Consumers

Whenever a new type of product is introduced into the marketplace, there is a significant lag time before consumer awareness catches up. For the product to succeed, consumers need to change their behavior. But first they have to understand what the product is, how to use it, and how it benefits them. This is where promotions come into play.

The promotional medium gives product suppliers the opportunity to get their new product into the hands of millions of consumers, enabling them to sample the product and become familiar and comfortable with it. Once this is accomplished, retail sales follow.

For an example of this, we need only to look at the evolution of prepaid phone cards. When prepaid long distance cards were first introduced into the marketplace in the early 1990s, telecom providers couldn’t give them away. Retailers wouldn’t buy them, so providers were forced to put them into stores on consignment, only to return two weeks later and discover that not a single product had sold. The problem was lack of broad-based consumer education and awareness. Consumers couldn’t understand how a plastic card featuring a PIN code equated to $10 worth of long distance phone time. It wasn’t until prepaid phone cards started turning up as giveaways in millions of packages – everything from Gillette razors to cereal boxes – that consumers caught on. As soon as they did, retail sales flourished and in a few years time, prepaid phone cards were a $4 billion industry. The pattern repeated itself recently with digital music, and savvy marketers are now tapping the promotional industry to introduce emerging mobile content technologies that will further change the way consumers interact with their mobile phones.

Drive Customer Acquisition

When it comes to acquiring customers for subscription-based products and services, few – if any – programs can match the cost effectiveness and power of promotions. Magazine publishers have long realized the benefit of using promotions as a customer acquisition vehicle and rely on free-trial magazine promotions as a lure to attract hundreds of thousands of new subscribers each year. Digital music, phone time, and mobile content are just a sampling of the subscription-based products in the market that are ideal for promotion-based acquisition programs. Through free-trial promotions, companies are able to simultaneously introduce their product to millions of consumers for a fraction of the cost of traditional advertising efforts and then integrate further discount offers or incentives to entice them to sign on as an ongoing customer.

Generate New Revenue

Companies are constantly developing products for the retail market. But few product providers consider the enormous revenue stream that can be generated by selling their products promotionally. Digital media, in particular, makes an ideal promotional product because of its universal appeal and low cost of delivery. By selling a product promotionally, companies can often drive greater per-product margins than they can from a retail product because there are fewer sales layers involved in the process. What’s more, selling products promotionally offers companies instant entry into a promotion sponsor’s long established distribution channel and enables companies to sell products in mass quantities that would be unimaginable on the retail side.

Imagine your product  or ten million pieces or your product  in hundreds or even thousands of big-box retailers across the country. That’s the power of promotions.

The Promotional Edge

Whether it’s a brand sponsor looking to capture the mindshare of potential customers or a product supplier interested in fully leveraging its revenue opportunities, promotions hold the key. Promotions serve as a direct link between the product provider and its consumers and can be reshaped and reconfigured as needed to achieve the desired results. In today’s fiercely competitive marketplace, quickly educating consumers, building market share and driving profitable revenue are critical to success. And savvy product providers and marketers who understand and take advantage of the promotional medium can get the competitive edge they need to succeed and thrive.

Barry Schaffer, a longtime innovator and pioneer in the promotions industry, is president of Promotional Currency LLC (www.promotionalcurrency.com), a leading marketing strategies firm specializing in digital entertainment promotions. The company combines digital music, ringtones, games and other d

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