Promotion Mythbusters to Prevent Poor Practices

Promotions (or competitions) are popular and usually well-intentioned strategies employed by businesses of all sizes to generate awareness. With the frequency of promotions doubling since 2015, it’s essential to promote properly to maximise return and build brand power. While it seems easy to put together some terms and conditions and allocate some budget towards an enticing prize, poor preparation can result in suboptimal results.

Plexus recently hosted a webinar with Devon Rick, Managing Partner at IMI International, exploring pitfalls and best practices for running promotions in 2024. Dozens of key stakeholders in multiple industries, including FMCG, retail, sports, and food and beverage, from Australia and abroad, turned in to hone their promotional plans.

What the latest market research and data tells us you should consider before running your next promotion

What is a trade promotion anyway?

A trade promotion is a free-to-enter competition that is conducted by brands and businesses to promote their products and services to help gain a wider exposure. They come in many forms; some common examples include purchasing a product to claim free branded merchandise, and an Instagram Story giveaway draw.

Legislation requires that the specific act of entering these competitions must be free for all entrants as the main condition of holding the promotion. However promoters may choose to limit who is eligible to enter within their promotion’s terms and conditions. These T&Cs are legally required for every promotion and outline factors such as entrant eligibility requirements, and how the winner will be determined.

Are promotions still useful for reaching marketing objectives in 2024?

In short, yes. During the webinar, Rick noted that trade promotions are still a quick, easy and effective way to build exposure in physical and digital spaces if they are thought through strategically.

A promotion is not useful when a perfect storm of misaimed marketing, poor prize selection and unrealistic objectives combine. For example, an overly novelty prize that leans too heavily into a business’s brand heritage may only attract the most loyal customers, not new ones. Furthermore, the impractical – and perhaps also irrelevant – nature of the prize might then drive even the most devoted consumers away, instead of more sales and participation. The result? A massively underperforming promotion that does little to build brand nor the bottom line.

In Australia, many states do not require businesses to apply for a permit to run a promotion, which makes them an appealing contribution to their marketing strategy. However, that is not to say promotions are not bound by rules. Failure to abide by regional jurisdiction and a lack of legal due diligence can risk fines, customer dissatisfaction and even legal repercussions.That said, check out this guide for a detailed breakdown of the various regulations and legislation that may be applicable to your promotion.

Why are you running your promotion?

There are three main motivators for running a promotion:

• Building the brand by appealing to customer values

• Enhancing trade relationships (between a goods/services company and a retailer, for example)

• Driving sales and volume

As Rick explains, companies often try to have their promotions meet all three goals, instead of focusing on just one, which usually leads to failure. A clearly defined objective helps crystallise the intentions of the promo.

As Rick explains, companies often try to have their promotions meet all three goals, instead of focusing on just one, which usually leads to failure. A clearly defined objective helps crystallise the intentions of the promo.

“When the right thing is done well, the other things become byproducts.”

His preference is for promotions that increase volume.

“I’m a big fan when people are unapologetically focused on maximising volume. I think everyone wins in this instance. You see huge overlap between brand and trade when it comes to running a good volume promotion.”

Plexus’s Practical Promotional Pointers

Here are some effective and actionable tips that can help you achieve greater participation and results for your company’s next promotion:

• Decide and define: be clear about what promotion aims to achieve and who it’s marketing to. For example, if a campaign is specifically about increasing social engagement with loyal customers, then set realistic targets for related metrics, namely sales.

• Be “on-pack”: according to IMI, 68% of people discover a fast-moving consumer good (FMCG) promotion for the first time when it’s displayed on packaging or directly adjacent markers such as shelf talkers (AKA “wobblers”). A common pitfall of poor promotion is lack of advertising; doing it at the source is essential, especially as retailers continue to enforce “clean floor” policies.

• Pick a pertinent prize: cash and gift cards aren’t the “sexiest” prizes but they are perennially popular, especially in challenging economic climates. Experience-based prizes such as destination holidays usually aren’t all-inclusive and incur extra costs, which may put customers off from entering the promotion. Prizes offering utility like appliances can be a good middle ground, but be relevant to your customer.

• Listen to promotional experts, not the HiPPO: “There's this thing called the HiPPO Principle – the Highest Paid Person's Opinion is usually the one that counts in the boardroom. Typically, they're not your target users. So, we always joke that if the CEO likes it, then it's probably a bad idea,” says Rick. For almost 10 years, Plexus’s consumer law specialists have partnered with market research experts such as IMI to ensure your promotional activities are optimised and legally compliant.

• Steal share: the most loyal customers are likely to already participate in your promotions, so volume-focused strategies can be more effective when targeting competitors’ customers. Similarly, a niche prize closely aligned with a brand’s heritage typically won’t attract new customers – and existing ones might not even be interested themselves.

• Make entry easy: capturing customers is already challenging, so any promotion entry mechanics that increase participation difficulty can discourage and even frustrate them. Complicated hurdles may stave off fraudulent behaviour, but it will likely scare off genuine users who would’ve looked good on the results sheet. This is reflected in an IMI case study where a consumer group’s “very likely” intention to participate in a company’s annual app-based promotion plummeted from 44% in 2015 to just 20% in 2023.

• Confirm compliance: Double check that your promotion meets all regulatory requirements and legislation of where your business operates, especially if it involves alcohol or gambling. For complete peace of mind, use Plexus’s Promotion Wizard: it’ll ensure all promotional terms and conditions are compliant with the relevant jurisdictions and are reviewed by lawyers. All within 24 hours – guaranteed.