Getting Serious About Sales Promotion
(Or, "You Don't Need a Weatherman to
Know Which Way the Wind Blows")
You could say that sales-promotion is a little like the weather.
It comes and goes in seasons, for example, start of summer and end
of year being two of augmented precipitation. Sometimes it brings
sunshine and warmth, sometimes just bluster. Sometimes in a general
blast like a hurricane, sometimes targeted tightly like the tip of
a tornado. And, oh yes, like the weather itself, sales-promotion is
The difference, it turns out, between sales-promotion (sometimes these days called market-promotion) and weather comes back to something Mark Twain said. "Everyone talks about the weather, nobody does anything about it." With promotion, it's the opposite. Everybody does it, nobody talks about it.
So let's say you get together with your pals, what's the conversation? Your latest scheme to sell a widget? Or the Knicks? It's probably more prudent to talk about that guy who plays center, what's his face, you know, the tall one. For one thing, who's going to be interested in hearing about widgets? And after all, isn't spilling the beans in marketing a little like handing over the keys to the kingdom?
If I have a great scheme up my sleeve—"Hey, I think I'll target upscale yuppies"—do I want you to get ideas, and target upscale yuppies too? Who knows, maybe I do. Does another player in your market steal share, or triple the size of the market?
Hey, this starts to get complicated. Do you really wanna go into it?
Maybe that's another difference between market promotion and basketball. In basketball, the reasons you hit and the reasons you miss are easy to see.
Bring In the Experts
The TV news has its sportscaster as well as its meteorologist to explain everything to viewers. Who explains things to the sales-promoters? Actually, just about everyone does. Marketing advice practically hails from the sky, with all these new research firms sending out releases, and outfits like PMA publishing the feedback from their own surveys. They published numbers at the end of April that send many messages about digicam sales.
Dropping like a stone, for example, is the status of digital cameras in the 1 to 1.9-megapixel range. No matter how PMA measures it (percentage of unit-based sales compared to a year ago, dollar sales, etc.) that group of cameras shows unit sales down. As of February, 48% or 54% (YTD). Sounds like that group of cameras is going splat.
Is it important to know why? It could be. If you had an inventory of 1-megapixel cameras, for example, you might wonder what to do next. Dump it fast, while you can? At any price? If nobody's buying these models, why should you order new ones?
The answers would seem to be self-evident. People just aren't buying 1-megapixel cameras, right? What else is there to know?
Well, plenty, maybe. What if a bunch of special sales during the period covered caused the next group, 2 to 2.9-megapixel cameras, to leap way ahead? And they did leap ahead—sales up 132% (February) or 69% (YTD), over 40% market share (both), dollar-based sales up 47% and 8%, dollar-based market share equaling 41.6% and 38.7% respectively—representing the single largest category listed. Does this mean you buy-up all the 2-megapixel cameras you can, put one in the window, and stand by for the deluge?
What if margins were more favorable last year, so resellers pushed the 2-megapixel models, in a merchandising context that won't repeat this year? It's actually kinda hard to decide exactly what to do without being certain why things work out. What if the least-popular cameras this year are least-popular for reasons having nothing to do with megapixels? What if they just happened to be blah cameras? What if those particular cameras wouldn't have sold even if they had 5-megapixel CCDs?
We can get the best numbers in the world, but they don't tell us everything. PMA never said they did, and in a couple cases states a caveat they think you should know. For example, "The extreme changes in this category reflect its relatively recent introduction," is given for the 3 to 3.9-megapixel group. There is also a 4+-megapixel group (which includes 5-megapixel cameras) whose introduction was even more recent. Are these important to keep in mind?
Well sure they are, as you study the increase in the 3-megapixel group as of February (13%) versus the decrease as of YTD (-11). At the same time, the 4+-megapixel group shoots up 898% (February) and 475% (YTD), holding at a 20.7% of market dollar share for both readings. I told you this was going to get complicated.