Promotions are one of the most useful features about micro markets. They keep a market location exciting and encourage additional purchases. Devin Smith, the director of product and brand development for All Star Services in Port Huron, MI has experienced their benefit first hand. He believes most operators are undervaluing the way micro-market technology can help in negotiating deals that result in new promotions and ultimately drive sales volume.
Local anniversary sparks promotion idea
One of the most recent promotions Smith launched was a local product celebrating an anniversary. "I reached out to the manufacturer of Vernors Ginger Ale after reading in a local newspaper about the company's 150 year anniversary," explained Smith. He remembered the soda, proudly produced in Detroit and thought it would appeal to his customers. Vernors Ginger Ale is currently owned by the Dr Pepper Snapple Group, so that is who Smith contacted to see about developing a win-win promotion. "Dr Pepper Snapple Group worked with us on pricing," said Smith. With the manufacturer's help, All Star Services offered a savings off each bottle of Vernors Ginger Ale sold during the month of August.
Unsurprisingly, the promotion was a huge success for that month. Sales of Vernors Ginger Ale went up 200 percent. The next month, after the promotion had ended, sales were still up, 100 percent over July numbers. "Vernors sales have continued to sustain. That is very beneficial for both of us," said Smith, who passed on all this information to Dr Pepper Snapple.
How to value promotions
The biggest challenge Smith had to overcome with this type of promotion was explaining what benefit there was for the manufacturer or supplier so they would offer a monetary incentive.
"Micro markets are the best trial segment for items," said Smith. The captive audience means the information can be compared more easily. The sample audience remains consistent, making it easier to spot how promotions change behavior, and sales. With convenience stores, the audience is transient and inconsistent. It is hard to identify if a promotion or trial product changed purchasing behavior or a different consumer came in that month. Information about the consumer and how purchasing changed and ultimate driving up that products' sales volume is really of value.
"It's important the manufacturer or supplier get the sales data back," said Smith. "We share the turns before the promotions, during the promotion, and after the promotion." Because micro markets make capturing this sales data easy, Smith is able to use it to encourage manufacturers and suppliers to offer substantial money off or free products to his company for promotions, ultimately designed to drive up sales volume. "We sell our vending machines and micro markets like real estate, similar to stores with slotting fees," said Smith. He is quick to point out however, that the deal has to be positive for both parties. "It has to be a mutually beneficial partnership," he said.
Educating your partners
Smith has really had to educate brokers and suppliers on the benefits so they are willing to work out a deal for promotional pricing. "I think turn data is underappreciated," he said. "What product is where and how much is sold is important."
Smith believes many manufacturers, brokers and suppliers are hesitant to take the risk of promotional pricing because it looks like money off the bottom line, but he argues that it should be considered in the marketing budget. Many people fast forward through television commercials and a brand certainly can't buy a banner in a workplace, argues Smith. However, if they put the marketing budget into promotional pricing for a micro market operation, they can advertise to a captive audience who is likely to make their product a habit. "Plus, we have the technology to truly show what sells," added Smith.
Promotions are meant to bring attention to a brand that customers either forgot about or didn't know about. This is what Smith believes happened with Vernors in his micro markets and it's been a successful strategy for All Star Services micro market promotions since.