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Sales Bags by I See Modern Britain on Flickr.

3 Rules for Brand-Friendly Sales Promotions

Tis the season of sales promotions, and 2011 is looking like one for the record books. Black Friday and Cyber Monday were both extremely successful this holiday season. These periods of sales promotions drive store traffic and sales volume through the promise of low prices. They work because shoppers love discounts. But discounting can become an addiction. Too many brands have been destroyed by constant discounting. If repeatedly used to drive sales, brand equity disappears. Here are three guidelines to help you use discounting in a brand-friendly way.

1. Make it a privilege. I’ve been tracking a retailer who blasts a deep price discount to email subscribers every day. No surprise, this brand is having trouble differentiating from competitors. Our research showed that price was the only distinctive brand attribute. Retailers like Nordstrom have mastered the art of discounting in bursts. Their half-yearly sales are massive traffic-drivers because shoppers know the great prices won’t last. Nordstrom takes it to another level: they provide early access to the discounts exclusively to their most loyal shoppers. Consider how you can time your discounting activities to drive volume when you need it, and make the experience so alluring that people can’t wait for you to do it again.



2. Resist the temptation to promote on price. Yes, people will want to know how much they can save, and a splashy add that says “50% off” will drive traffic. However, you begin equating your brand with price. Instead, use your branded advertising and media to draw attention to what’s available now with better access. Let others talk about your great price discounts. This is one area where social media can play a huge role. Draw attention to the brand with your traditional communications, leverage your network to create buzz about the amazing discounts. When I was at Disney, we never allowed licensees to promote “discounts” with Disney. Instead, we asked them to talk about “great value.” It was dogmatic and artificial, but the idea was right and it helped us preserve the specialness of the Disney brand.



3. Keep your promises. A lot of retailers spend 11 months of the year trying to build a reliable brand image and then throw it away during the one month they wish to move sales. They hire temporary personnel who don’t deliver the right brand touch. Or their site is a disaster. Worse, it crashes because of traffic spikes. Many retailers discount products that weren’t strong to begin with. They promise one thing (discounts on something you love) and deliver another (discounts on things you don’t really want). I asked a colleague who worked with McDonald’s why instant-win coupons were always on the boxes of french fries. He said it was because McDonald’s didn’t really want you to redeem them. They put the coupon on the box because they knew no woman would want the greasy, smelly clipping from a fry box in her purse. Many retailers take the same tactic with their special offers. To preserve brand value, deliver an experience that lives up to what you promise.

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A market is never saturated with a good product, but it is very quickly saturated with a bad one.

// Henry Ford

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Demarketing

A friend turned me on to a great story on Studio 360 about signage for the Yucca Mountain nuclear waste storage site. Here’s the dilemma: how do you design a symbol that will instantly communicate ‘danger’ to future generations? Think about it. Nuclear waste remains dangerous for thousands of years. The site needs signs that don’t rot or deteriorate rapidly, and those signs must warn future archeologists about the dangers of the treasure inside without much explanation. The future explorers might not speak our language. How do you create a mark that intuitively deters people? It’s not as easy as you might think. A skull and crossbones sounds good on the surface, but it’s also a mark that is associated with pirates … and treasure. By trying to forewarn the treasure hunter, you might actually incentivize him to dig to his death.

The challenge reminds me of a great article penned by Sidney J. Levy and Philip Kotler back in 1971. In “Demarketing. Yes, Demarketing,” they asked somewhat hypothetically how marketing might apply to reverse market situations. We’re very familiar with the conventional use of marketing—trying to drive demand for products and services when there is ample supply. But they asked if marketing, and branding, could be used to discourage customers. Certainly, some marketers have used this in a widespread fashion with dangerous products, such as cigarettes. Levy and Kotler described the tricky process of using demarketing to reduce demand in unfavorable business segments, and they described the ethical issues in doing so. But, while much of their work focused on marketing practices and policies, they didn’t address the big symbolic question: how do you create a brand that discourages product use. It’s worth contemplating. Sometimes, thinking about questions such as these helps the marketer to better the brands that must do the opposite.

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The Yoke Goes Down on Airline Marketing

They’re calling it a ‘co-payment.’ I’m not kidding. That’s what they’re calling it.

Today, American Airlines announced that it would begin charging for some mileage upgrades. Now, I get it. Times are tough. Fuel prices are high. The airlines are getting squeezed from every angle. I’m actually sympathetic. Carriers like American are saddled with a legacy of labor and operating constraints that don’t change as quickly as our economy. But that doesn’t resolve the foolish marketing approach they have employed.

When you attempt to redeem miles on American for an upgrade, the miles required will be higher and you’ll have to fork over some cash. But American doesn’t call that fee a fee. Instead, they’re branding it as a “co-payment.”

This is the silliest thing I’ve ever heard. It’s just insulting. Mileage upgrades are customer rewards, a loyalty incentive. ‘Co-payment’ implies that both parties have some obligation to pay for the service. That’s why insurance companies began using the phrase when they started requiring the insured to share in the cost of routine office visits. Granted, it’s a bit of a stretch there, but the context made sense because the transaction generally involved three parties: the employer, the insurer, and the insured. When co-payments were introduced, it was novel for the insured to have to share in the cost.

I suppose it is novel for the loyalty participant to share in the cost, but it defeats the whole purpose of a loyalty program. I fly a lot. I earn rewards. Sometimes, I wish to redeem those rewards to enjoy the benefits of my loyalty. Apparently, redeeming my gift requires me to share in the cost. I tell you what. For your birthday, I’m going to buy you a cake. I’ll even bring it to you. We’ll sing Happy Birthday and just before you cut the cake, I’m going to ask you for a co-payment to cover a portion of the costs it took for me to purchase and transport the cake. It’s the least you can do in these economic times.

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