It's raining today, and foot traffic in the store is sparse. In the quiet personal care section, there are more promoters than shoppers. Old Wang, with a worried look, has already paced back and forth several times from the main shelf to the floor display in the main aisle... "Manager Wang, I don't know why, but this promotion mechanism used to sell over 200 bottles a day, and now it's less than half. Is it getting tired?" asked A Ling, a star promoter who has worked at this supermarket for seven years. "A Ling, your observation is correct! The business environment has changed, and customers' shopping habits are also changing. If our promotion mechanisms and strategies don't change, we're dead." Are promotions the lifeline of sales managers? Wrong! Promotions are everyone's lifeline! In recent years, due to the increasing prominence of brand fragmentation and product homogenization, fueled by capital and the internet, every mainstream FMCG category is in a state of full competition. Not only is competition among brands becoming more intense, but the channel competition between old retail and new retail is also fierce. Gradually, we have begun to notice that current promotion strategies face many "pain points," and these "pain points" generally appear in clusters and affect each other— Pain Point 1: From ordinary consumers: They are accustomed to "no promotion, no purchase," leading manufacturers and retailers to "no promotion, no sales." Pain Point 2: From frontline promoters: Promotions are just "discounts" or "buy and gift," and neighboring competitors always have more resources than us. Pain Point 3: From frontline salespeople: Promotional sales account for an increasing proportion, and monthly "sales targets" are essentially "promotion targets." Pain Point 4: From the marketing planning department: Colleagues responsible for promotion design have become accustomed to "if competitors have promotions, we follow up." Pain Point 5: From the headquarters brand department: Promotions are a good tool! Promotions can help me "buy" market share... Well, promotions really are everyone's lifeline! Since promotions are such an important lifeline, as a city manager in a first-tier city amidst rapid business environment changes, you should attach great importance to the upgrade of promotion strategies and think deeply! The FMCG market environment is rapidly evolving on a "monthly" and "quarterly" basis. The traditional "headquarters to region, region to province, province to city, city to customer" chain of "traditional promotion design, transmission, and execution" is gone forever. The increasingly fragmented channels force manufacturers to formulate promotion policies and strategies that are no longer "top-down" but "local servo + local response." The previous "executor" mentality and role of first-tier city managers must transform into a "landlord mindset" of "decision-maker + executor"! Currently, in many manufacturers, the formulation of promotion strategies, content, and plans is basically determined by headquarters. In this process, city managers scattered across the country have no right to participate, formulate, or decide; the only thing they have is the right to execute. But this execution should not be "blind execution," but "informed execution"! That is, besides generating sales, what other purposes does this promotion mechanism serve? For example, "spend 99 yuan and get a 19 yuan electronic shopping voucher valid for next time" not only increases the average transaction value by increasing the shopping basket amount, but also has the additional purpose of encouraging repeat purchases and activating online membership qualifications. Perhaps many frontline sales managers dismiss these analyses. "I just need to hit my sales numbers every month. Why analyze the non-sales purposes of promotion mechanisms?" Wrong! This is dangerous "smallholder mentality"! With the continuous iteration of new retail and new omni-channel, the importance of "localized marketing decisions" will continue to increase. Each of our frontline commanders (provincial managers and city managers) will bear greater responsibility in the future—full control and full responsibility for promotion mechanisms from front-end design to end execution! Therefore, from the perspective of a first-tier city manager, in addition to focusing on the perfect execution of daily promotions, I believe that in the era of omni-channel distribution, frontline commanders must proactively learn, prepare for the future, and think deeply about all aspects of promotions, fully preparing to become true "professional omni-channel city managers." Continuing the logic of new and old scenarios that has run through our previous articles, whether in new or old scenarios, promotion strategies in all scenarios should follow this approach: Based on the business model and underlying logic of different scenarios, closely centered on the customer (i.e., the shopper), targeting clear promotion objectives, formulate precise promotion mechanisms, and fully utilize internet data, tools, or platforms for efficient execution, thereby maximizing promotional sales! This is reflected in three levels:
1. Promotion guidance framework: the underlying business logic in different scenarios 2. Differences in promotion purposes, forms, and execution between new and old scenarios 3. Taking O2O as an example, how to break down promotion strategies into specific actions
-01- Promotion guidance framework: The underlying business logic in different scenarios Behind the upgrade of promotion strategies is the underlying business logic based on different scenarios. As a first-tier city manager, you may not need to design promotions, but when you choose promotions, you must have an overall sense of the business model behind them. When you cannot judge or choose, return to the underlying business thinking and do preliminary screening, at least so the direction won't go astray. First-tier city managers must clearly know the purpose of each promotion activity. Even if it's a discount or special price, you should know the purpose of the special price for this particular store. Some are for traffic, hoping to get more people in; some are to increase average transaction value, like "spend a certain amount and get a gift," hoping people buy more; some are for frequency, hoping for continuous repurchase. If we list the forms of promotions, frankly, there are only so many. But where to place the promotion, at what time to do it, and for which group to do it—the same promotion form can have vastly different purposes. Using new and old scenarios as the dividing dimension, and centering on the basic business model, let's look at the differences: 1. Old scenario business model: Traffic * Frequency * Average Transaction Value = Sales Offline, when consumers enter the store, they are likely to have a purposeful purchase. At this point, when a consumer enters the personal care or beverage section, how to do in-store traffic diversion to turn them into effective traffic for us, rather than choosing competitors, is key. Of course, there is also off-store traffic diversion, usually the store cooperates with leading well-known brands for off-store diversion, through promotional DM flyers, outdoor advertising, etc. How to increase frequency? Typically, issuing electronic or physical coupons, such as "10% off on next purchase with receipt," etc. Increasing average transaction value is the most familiar form of promotion: spend a certain amount and get a discount, spend a certain amount and get a gift, buy 2 get 1 free, etc. The above are To C consumer promotions for "hypermarkets and supermarkets" in old scenarios. Additionally, there are To B channel merchant promotions for small supermarkets and wholesale markets. Traffic is the number of merchants, frequency is the order frequency of merchants (merchant activity), and average transaction value is the number of SKUs * pieces/cases * price. Generally speaking, traffic cannot be simply solved through promotions, but frequency and average transaction value can be achieved through different promotion forms. As the frontline commander of the regional market, a first-tier city manager should plan the frequency of promotions in advance on a time dimension. Promotions in old scenarios lean towards offline, and the complexity of execution is relatively high. At the same time, offline promotion execution involves human resources and POSM material support. Therefore, the more down-market the channel, the lower the promotion frequency. Time and energy are limited; perfectly executing one promotion plan is far more practical than generally executing two promotion plans. According to channel business share and promotion execution difficulty: KC stores account for 30% of business, generally with a 14-day cycle, planning 2 promotions per month; BC stores account for 20%, generally 10-14 days per cycle, 2-3 promotions per month; small stores account for 20%, due to the large number and complexity, the efficiency of communication is low, so one promotion per month; wholesale markets account for 10%, basically one promotion per month. 2. New scenario business model: Traffic * Conversion Rate * Average Transaction Value = GMV Because it's online, consumers can be reached every day and can "enter the store" every day, but they may not buy your products; they can buy other products. Therefore, the core action for brands is conversion: when consumers come in, how to turn them into your traffic. In new scenarios, the key actions are conversion rate and average transaction value. Here, whether it's To C consumer promotions or To B channel merchant promotions, the key is conversion and average transaction value. At the current stage, new scenarios are in a high-growth phase. The scenarios are basically online, execution difficulty is moderate, and apart from designing posters and copywriting creativity, there are no other hard investments, and promotions are relatively more flexible. Therefore, promotions should be high-frequency. Overall, new scenarios are also in a traffic acquisition period. Not only do brands need promotions, but platforms also need promotions. O2O home delivery platforms generally have one promotion per week; ERTM, represented by national platforms like JD New Channel and Alibaba Retail Link, basically focuses on platform promotions, with 2-3 promotions per month, and with our brand as the main focus, one promotion per month. Community group buying is currently mainly based on promotional price wars, calculated daily, with high frequency, requiring rapid follow-up and operations. -02- Under new and old scenarios: Promotion purposes, forms, and execution points This promotion strategy upgrade map for new and old scenarios is a small gift for every first-tier city manager. During the pandemic, various regions and channels must have accumulated a lot of inventory, and many products have become closer to expiry. In the rush to resume work and production, please keep a clear head! Promotions are not about more, but about precision! Every promotion activity has more than just sales! Especially the new scenarios that have emerged in the past two years have completely different promotion mechanisms and techniques from traditional offline channels. First-tier city managers need to lead their teams to seriously learn, actually practice, and meticulously refine every execution link and key action. Don't rely on training classroom knowledge points, but focus on every detail in actual operation. -03- Taking O2O as an example: How to break down promotion strategies into specific actions For promotions in old scenarios, first-tier city managers are already very experienced, so I won't go into detail. Let's take O2O home delivery as an example to discuss the breakdown of promotion strategy actions. Centering on the business model in new scenarios, for different indicators affecting the business, set the promotion purpose and main promotion mechanisms under the corresponding indicators. For the traffic indicator, the core is new customer acquisition or traffic diversion. New customer acquisition refers to the addition of new consumers, while traffic diversion is to increase attention to our product among consumers in the platform. The corresponding main promotion forms include: new customer coupons, limited-time flash sales, and free shipping coupons. In addition to the form, attention should also be paid to the "position." For example, on the splash screen or window position, multiple exposures within the platform, and exposure in high-traffic bestseller areas, etc. For the conversion indicator, the core is to increase penetration and conversion. For example, joint promotions bundled with bestsellers; single-item special prices to increase conversion of low-penetration single-item purchases. For the average transaction value indicator, the core is to increase the quantity of items purchased or increase the number of items, especially high-end products or new products. The main forms are spend-based gifts or tiered discounts, as well as high-threshold spend-based discounts. Overall, the current new scenarios mainly include the above forms. Because online is a bestseller-driven business logic, promotions are a very important weapon for the platform. Therefore, four points of detail are emphasized here:
1. Flash sale items must be strictly limited in quantity; 2. New customer coupons must be limited per ID; 3. Promotional items in principle do not participate in spend-based discounts; 4. After designated items participate in spend-based discounts, the item price must not be lower than the guide price. Combined with the previous planning of new and old product lines for new and old scenarios, in the initial stage of product listing, the core is to create bestsellers, mainly through spend-based discounts and special prices. In the mid-term stage, gradually shift promotion resources to growing core bestsellers and new products, using forms such as buy-and-gift, free shipping coupons, flash sales, and new customer coupons, while increasing GMV and penetration, appropriately reducing direct price damage. Combined with changes in new scenarios, in the long run, first-tier city managers must ultimately return to the investment efficiency ratio. Because these internet new channels backed by capital change too fast, long-term planning is impossible. In the current stage, city managers should focus on the conversion of "bestsellers generating sales" and "cultivating sub-bestsellers and new products." Never just sell bestsellers and forget the cultivation of sub-bestsellers and new products. By this point, the readability of this article is almost negative. For frontline managers who are on the go all day, it is not easy to spend an hour or two to understand and digest the above basic promotion logic. However, we must change. Don't use old thinking to deal with new battles. Start by clarifying and digesting the most basic promotion business logic. As frontline market commanders, when facing multiple channels, city managers must clearly understand what the sales carrier is behind the promotion and what the business logic behind the carrier is. Only by knowing the business models in different scenarios can city managers act with a clear goal, choose the right promotion, and achieve the corresponding goals! The business development of a city is cyclical and continuous. Do not fall into the vicious cycle of "no promotion, no sales" or "promotion targets are sales targets." Quickly iterate and adapt to the promotion methods and incremental opportunities brought by new retail and new channels. Continuously learn and update. The current FMCG regional sales team must be an efficient learning organization; otherwise, it will inevitably face the dead end of being gradually eliminated. Thinking in the trenches with the smell of gunpowder is more practical than analyzing with a latte in the office! Standing by the terminal shelf observing and having in-depth conversations with the promotion lady, Old Wang felt that the past hour was fulfilling. He had a rough idea about the upgrade of promotion strategies, and next he would lead the team to continue in-depth. Before leaving the store, Old Wang did not forget to encourage the promoter and say goodbye: "A Ling, don't be discouraged! I will work with my colleagues to optimize the promotion mechanism as soon as possible, so you can sell more smoothly and with more energy!" Outside, the rain was falling harder, but in Old Wang's heart, the sun was shining brightly... About the author: Xu Xiang, currently the Sales Director of Unilever South China, with 20 years of experience in FMCG personal care, dairy, and condiments, deeply engaged in regional market management and customer marketing, willing to exchange and learn with peers. Tips will be paid 400-2000 yuan once adopted.