How To Build Value For Money with Promotion

The Relationship Between Value For Money and Promotion

The strength of your brand’s Value for Money indicates how well people feel your brand justifies its cost. Put simply: do they think it’s worth it? Not to be confused with “being cheap,” many premium and luxury items can achieve a high Value for Money score simply because the quality or experience of their product delivery outweighs the expense.  

To increase your brand’s Value for Money, you need to convince people that what your product gives them is greater than the cost they pay for it. In essence, it’s giving the buyer a positive “quid pro quo.” 
 
Promotions – most often in-store, online, or services discounts – can be used to increase Value for Money by lowering the price per unit of the product in order to drive trials. Often, the barrier to try a product is price, so occasionally lowering your brand’s cost to the consumer allows more price-sensitive or unsure buyers to experience it. Overdeliver in that moment, and you just get yourself a loyal customer. 
 
When using Promotion to increase your Value for Money you must consider 5 things: 

1. Where should I run promotions? If you’re stocked on retailer shelves, available online, or using a service provider, you do not need to run the same types of promotions in the same places. Depending on your shopper profile and the competitive environment you find yourself in, you should run promotions to increase your Value for Money in the most competitive retailer environments. Where you’re fighting for trial or where your quality vs. cost equation is not in the shopper’s favor. 

2. How often should I run promotions? Planning your promotions calendar is important, as Value for Money will increase when promotions are on. Promotions are expensive, however, and you cannot (and should not) always run them. Your Value for Money will fluctuate when on and off promotion, so logging your promotional activity will help you understand the ebb and flow of this driver. 

3. How deep should I run promotions? There are many different kinds of Promotions., but they’re all essentially “discounts.” From percentage discounts to buy one get one free, you must consider the value you are giving people off a single purchase occasion. Giving away too much value can mean that they will never buy full price. Giving away too little value may mean that your trial volume suffers.

4. What do my competitors’ promotions look like? In order to increase your Value for Money through Promotion, you must keep an eye on your competitors’ promotional activities. If they are discounting at the same time as you and/or deeper than you, your Value for Money may not improve. 

5. How do I ensure my overall brand does not become devalued through Promotion? While Promotions can lead to improved Value for Money, over-promotion can train people to buy solely on discount and end up having a counter effect. When this occurs, your Value for Money may start decreasing when you are not on promotion, which is dangerous – so use Promotion with caution! 

What should you do next?

• Put together a sensible promotional calendar based on the retailer and competitive environment to determine where, how often, and how deep you will run promotions.  

• Depending on your brand’s pricing and positioning in the category, set a sensible target for maximum volume sold on deal and have a clear sight on how that volume-profit ratio impacts your business plan. 

• Use Promotions with caution to drive Value for Money, ensuring that when you are at your everyday retail price, your product’s quality to price ratio is still in the buyers’ favor.

How to determine if it’s working.

• Determine whether your Value for Money is increasing due to your Promotional efforts by observing whether this Driver increases as your Promotions run throughout the year.  

• If you notice that your rate of sale is holding strong (or even increasing!) when you’re not on discount, you’ll know that Promotions have done a great job of driving trial and improving your Value for Money.  
  
  
  Guidance from:
  Michael Coden | Head of Marketing, ProQuo AI
  
  Michael has spent 10 years developing and building brands across the US, Europe and Australasia for global companies.