Part 3: Using Promotions In Micro Markets

March 13, 2015

For operators entering into micro markets, one common question arises: how many micro markets should run at one time? The answer to that question, operators need to first determine the customer behavior they are trying to drive. 

"I would say that customer behavior could be defined as the specific actions a customer takes as a result of their shopping experience with you, including your promotions strategy," said Kevin Galaida, VP of Breakroom Provisions.

Galaida notes 4 common customer behavior that operators will want to encourage: 

First, driving your transaction total up. Try doing a promotion that will give the customer 50 cents off when their transaction total gets to $5.

Second, getting the customer to try something they wouldn’t normally try. Although every customer knows generally what a turkey sandwich is, operators need to give consumers an incentive to try their turkey sandwich.

Third, encouraging the customers to purchase a complimentary item. For example, encourage the purchase of a pack of mints to go with coffee or a breakfast bar to go with orange juice.

Fourth, getting the customers to shop in the breakroom when they wouldn’t otherwise shop there. Instead of doing on a “going out of date” promotion, operators should consider a happy hour sale. That encourages customers to purchase items when they are at their freshest and it gets them to shop in the market when they wouldn’t otherwise be there.

Because micro markets are so much different than retail, however, some promotions that work at a grocery store, might not work in a market.

"Buy one get one free promotions are generally lost leaders in the retail industry to get customers into the store," said Galaida. "In the micro market environment, your customers are already there several times a week, so that isn't necessarily as big of a challenge. A better promotion might be buy two and get a discount. Even if that customer buys a soda from you and then doesn't buy a soda the next day, you still protect your margins and drive your gross margin dollars in the initial purchase."

So how many promotions should operators run at one time? As Galaida notes, there is no magic number yet.

"There are general rules in how you should approach your promotion strategy," said Galaida. "Whatever promotion you're running you want to make sure it has as broad of an appeal as possible so that you make a positive impact on as many customers as possible. Think in terms of product categories as opposed to promoting specific items or specific items bought in a combination. Instead of having one specific sandwich bought with one specific beverage as the promotion, think about an entire product line from one supplier being promoted one month and then a different supplier the next month."

Operators should also avoid having conflicting promotions or too many promotions tied to one item.

"It's important that the customer isn't confused in the transaction," said Galaida. "They want to be able to quickly understand what they did to earn that promotion or that reward.

Do you have a micro market promotion question that you’d like answered? Shoot me an email or send us a Tweet. This is VendingMarketWatch TV, I’m Adrienne Zimmer.