It is time to stop the horrible habit of running regional promotions to increase sales or introduce products.
Fictional Case History
You run a slide company we will call Blass. The newest slide has an automatic, dog food sensor that determines if the dog should be fed or not and then slides out the dog food bowl at the appropriate time.
The new “AutoDog” slide is selling well in Northern Wisconsin, but sales suck in Southern Alabama. To increase sales in Southern Alabama, the Blass slide company has decided to run a sales promotion with the Alabama distributor, Lion Distributing.
Blass will discount the AutoDog slide 25% in Alabama to Lion Distributing. Lion agrees to further discount the AutoDog by taking 15% off their margin.
The 90-day promotion starts off well with 20 AutoDogs being sold within the first week by Lion Distributing. The second week sees a surge of 1,000 AutoDogs, mysteriously all from new customers out of the normal distributor territory. The third week and through the rest of the 90 days, barely any AutoDogs sell.
Why did it die?
In the old days of sales, the promotion would increase awareness and sales of the AutoDog. Lion Distributing would benefit by adding a new item in their distribution mix and have a “leg up” on the other local competing distributors.
But this promotional sales dog no longer hunts.
In today’s market, the competing distributors are part of a national chain that also carries the Blass line of slides. Immediately upon releasing the new AutoDog promotion, the competitors to Lion Supply have demanded the same pricing program. New faster local shippers are able to drop ship the slide to Lion’s customers within a day of hearing of the program.
It is time to recognize the new reality: With the advancement in technology and logistics, the market knowledge has moved beyond the promotional systems of the last decade.
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