The article Mass Retailers Retool Promotional Strategy to Lure Shoppers provides an in-depth analysis of the strategies that retailers are using to increase the sales and customer traffic at their stores. Companies are using analytical marketing strategies to influence the buyer behavior of shoppers. Some of the techniques that are used the most by retailers are gift cards, consumer events, and gifts-with-purchases. Retailers are trying to stay away from profit depleting marketing strategies such as buy one to get one free (BOGO). The strategy is not viable in the long term because it lowers revenues and increases costs.
According to Revlon’s president and CEO brand equity is built more effectively through advertising than promotional activity (Prior & Nagel). Revlon is moving away from promotional activity because it can erode the brand value in the customer’s eyes. Walgreens and CVS are seeking to fulfill the needs of value obsessed customers in the beauty industry by experimenting with new promotional strategies. The retool promotional efforts of these two pharmacies are working well. During the first nine months of 2010 the beauty industry generated total revenues of $1.87 billion which represents an increase of 6% in comparison with the previous year.
One of the problems with the implementation of BOGO strategies is that many customers take advantage of those offers to purchase in bulk with the purpose of storing up. Shoppers have become smarter and more patient than in the past. They are willing to wait for sales in order to avoid paying retail prices. Retailers are trying not to flood the market with promotions. Retailers are expected to become more aggressive during fall season which leads to the most important season in the retail world, Christmas season.
A way that companies are creating value through the use of BOGO is by tying the offers to the firm’s loyalty programs. The use of price discounts is not the only strategy retailers are using. An example of a new innovative strategy is Procter’s and Gamble offer of giving away a $5 gift card to shoppers who buy a certain number of select P&G brands. Redesigning beauty departments is another way to attract more customer traffic to a store.
Walgreens has been one of the most aggressive retailers in the beauty industry this season. The company offers a $10 rebate on purchases of Neutrogena, RoC, Revlon and Nexxus brands. The company also used 20% discount offers and buy one get one 50% off offers. New beauty items account for 80% of the store’s growth. CVS is another retailer that has many promotional initiatives for its customers. One of CVS most effective promotions is gift-with-purchase offers. Another promotion the company is offering is a free charm to customers that spend $15 or more on beauty products.
Other companies such as Wal-Mart have realized that price cuts and advertising spending does not always lead to increase levels of sales. One of the firm’s new strategies is to increase media exposure. The article described the efforts of many retailers in the beauty industry. I agree with the author’s claim that BOGO strategies are flawed. The use of BOGO is a strategy that is better suited for products that are making their entrance into the marketplace. Due to the intense competition in the retail marketplace companies have to be creative in their promotional efforts.
I thought the article did not provide sufficient information about how companies can improve their brand value. Branding is a strategy that can help a company in the long term. Most of the promotional examples featured in the article were short term solutions. Work Cited Page Prior, M. and Andrea Nagel. “Mass Retailers Retool Promotional Strategy To Lure Shoppers. ” Fairchild Publications 48.6 (2010).