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18.11.2024
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How and Why to Analyze Competitors’ Sales Promotions
Promotions are a critical tool for boosting demand and driving product sales. However, launching promotions with straightforward mechanics (such as strikethrough pricing, discounts, or gifts) can only temporarily increase sales. Once a campaign ends, sales can become unstable.
In this article, we explore why analyzing competitors’ sales promotions is essential for category managers and how it supports the building of successful long-term sales strategies.
What Are Sales Promotions, and How Do They Affect Sales Dynamics?
Sales promotions include various types of offers designed to boost demand for specific products. This strategy is commonly used by marketers during seasonal campaigns, when competition for consumer attention intensifies.
Discounts, seasonal sales, and special offers are powerful motivators for increasing consumer demand and online store sales. In our experience working with online shops, in the fourth quarter (which includes the holiday season), online sales can surge by 30% to 100% compared to other quarters, driven both by high demand and retailer promotions. This highlights the significant impact of promotions on sales.
However, frequent promotions can risk sales stability for all but the largest discount retailers. For most online stores, a strategic approach to promotions is crucial. Without one, achieving sales consistency becomes challenging.
Promotional activities generally drive sales volume, but sustaining demand outside promotional periods requires additional strategies.
Start by refining your pricing; identifying the optimal market price for each product is essential. Key tools such as market price analysis, supplier price monitoring, and automated repricing can support this process. Our article on e-commerce pricing delves into how to set optimal prices by tracking competitor and partner data, enabling you to meet market expectations without relying solely on discounts.
To retain customer interest, category managers should also analyze competitors’ digital shelves. This involves tracking popular products and market positioning as well as identifying ways to improve your own assortment. Our article on assortment analysis outlines key steps to help you build an effective category management strategy.
Creating Promotions: Which Approach Is Most Effective?
Let’s say you decide to run a sales promo. The question arises: Which mechanics should you choose? There are several common options:
Discounts — fixed or percentage
Promotional codes that activate a discount on an order
Gifts — for example, offering a product as a gift with orders of a certain amount
Bundles (or bundle pricing) — offering a set of goods or services at a reduced price
Free services when ordering goods — delivery, installation, etc.
These are the most common promotion mechanisms for online stores, and it’s not advisable to overcomplicate things by trying to invent something new, as unconventional promotions can confuse consumers.
Remember: The goal is to create value for the consumer, making your offer attractive. How can you achieve this without inventing new mechanics? The answer is obvious: by offering better terms than competitors.
The best approach is to assess market offerings (types of promotions) and then replicate (and enhance) effective mechanics on your own site.
These tasks fall to the marketing and category management teams. Collaboration between them is essential. Marketers bring insights into target audiences and consumer trends, while category managers assess competitor promotions. An experienced category manager can intuitively gauge a promotion’s value for consumers and suggest ways to improve it.
What exactly can be improved? Among other things, you might adjust the size of the discount (direct or with a promotional code) or change what gift is offered. In short, you need to increase the attractiveness of your own offers compared to competitors’ offers.
To develop effective promotions, you need to understand competitors’ offers. Analyzing competitors’ promotions helps you identify which strategies resonate in the market, enabling you to craft even more compelling offers for consumers.
Let’s consider how market analysis helps the category manager in this task.
Market Analysis: The Key to Launching Successful Sales Promotions
Imagine a competitor launches a major discount campaign, causing your store’s sales to decline. Conversely, there are times when a competitor’s promotion drives overall demand in the market, benefitting all players.
The challenge is that category managers often see only the outcomes (sales increases or decreases) without clearly understanding the causes (such as a competitor’s campaign) — unless they monitor the market.
Automated tools for tracking prices and promotions can help to identify these market dynamics, revealing how competitor actions influence both demand patterns and sales outcomes. For example, the Pricer24 platform enables you to monitor competitors’ offerings and respond quickly, gaining valuable insights for your own promotional planning. Pricer24 can display promotional products in a list with active links to product pages for detailed information on promotion terms.
This feature helps you pinpoint which promotions are impacting your market share and anticipate shifts in sales dynamics.
And the most important thing: Returning to the question of how to create an effective promotion, market analysis in Pricer24 gives you an opportunity to focus on developing mechanics and actions in response to competitors’ promotions.
If a competitor is running a promotion, consider taking these steps:
Evaluate the impact of the competitor’s sales promotion
Determine how the competitor’s promotion could affect your market share, customer loyalty, and overall sales.
Review your strategy
Analyze your promo and pricing strategy. Decide if adjustments are needed, such as price changes for similar products or new promotional offerings.
Develop counter offers
Consider launching a discount or special offer to retain customer engagement and maintain competitiveness.
Communicate with customers
Prepare promotional materials that highlight the advantages of your offers.
Monitor results
Once the campaign is live, track its results closely. Collect data on sales, customer feedback, and shifts in consumer behavior, and adjust as needed.
By examining competitor promotions, you can benchmark your offers against market standards. Studying the types of promotions, discount levels, and mechanics used by other players will allow you to assess the competitiveness of your own offers.
Conclusion
Without timely access to promotional data, category managers risk making decisions that overlook key factors influencing consumer behavior and market dynamics. Insights into competitors’ promotions and their effects on your sales dynamics allow you to more accurately evaluate your own marketing strategies. This data-driven approach supports informed stock management and keeps you a step ahead of the competition.
Request a demo to see how Pricer24 can meet your needs
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