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Here’s When to Target Value-Conscious Shoppers with Conditional Promotions

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Are your clients looking for the best way to promote discounted products? When marketers must move a lot of product in a short period of time, they should advertise great deals. But, the type of promotion they use can drive different responses from consumers. Here’s what they need to know.

Professor Ozge Sahin of the Johns Hopkins Carey Business School, along with two colleagues, recently studied shopper behavior responses to market promotions. The academicians published their findings in a paper titled “Conditional Promotions and Consumer Overspending.”

Conditional Promotions

When marketers use conditional promotions, they typically employ one of two types:

  • All-unit discount: Consumers receive a fixed percentage off the total price of everything they buy. Usually, consumers must purchase a minimum of product to qualify.
  • Fixed-amount discount: Consumers receive a set dollar amount off the purchase, no matter how much they’ll buy. They’ll need to purchase a minimum amount of product.

Target Audiences

The researchers also considered the types of consumers who are likely to start shopping as a result of these promotions.

  • Value-conscious: These consumers primarily want to save money.
  • Deal-conscious: These consumers enjoy the excitement of getting a deal.

Your clients will be interested in reviewing a complete profile of these buying audiences. Check out the details on AdMall from SalesFuel.

Recommendations

To maximize sales and profits, your clients must target the right kind of consumer with the right kind of deal. The researchers recommend that marketers use the all-unit discount promotion model to introduce higher-priced items or new products. For example, the ad should promise 30% off when shoppers buy two or more items. This promotional strategy encourages consumers to pick up more of a product they may hesitate to try. The hesitation stems from consumers’ lack of knowledge about a new product, or their unwillingness to pay full-price for a product.

The fixed amount discount model works well for moving products that consumers like. Consumers also don’t mind paying full price for these products. However, the deal-conscious consumers will buy more than they need now, because they can’t resist the ‘deal’ angle. They’ll be happy to buy two watermelons and get a fixed $3 discount off the purchase price. This discount model is most effective for “frequent promotion of a low-price or established, brand-name product.”

Conditional promotions can be a good way for your clients to clear their shelves of seasonal products or food items or to introduce new products. Talk with your top marketers about the types of promotions they plan to use this year.

Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-owner of several small businesses in the health care services sector.

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