Using promotion to boost sales
As business developers, we are eager for new listings as the goal of a commercial journey. Building structural export with a new line of products. Sales need to be sparked because you need to start from scratch. In this article we will briefly discuss product support in the German market and our recent experiences at REWE – the number 2 retailer in Germany.
The key is consumer familiarity of the new product. The likelihood that they will buy unfamiliar products is low. With strong proposition, we assume that follow-up purchases will be made. Driving sales is important. In fact, box office sales and rotation for upscaling in distribution are considered.
Promotion is also considered highly effective in Germany. In-store activities have an impact as well, but are expensive and Germany as a large market is also less easy to deploy. For mainstream retailers such as REWE, this involves a discount on the fixed consumer price. Quantum offers are less common. Make an effort to agree on a promo plan with the customer at an early stage, as the power lies in the (periodic) repetition of the promotion. The coupon for a discount on the follow-up purchase lowers the threshold for repeat purchases, and acquaintance with other variants of your product series. So is it the same as in Dutch Retail? Not quite. REWE works differently in this respect:
- Consumer prices in promos: as a supplier, you want as much of your sponsorship as you can to be reflected in the promotional price. However, a lot of buyers in Germany react shook to proposals for consumer promotion scenarios. This is despite the fact that they often ask for a consumer recommended price (UEVP in German) in the process of listing. It then often comes down to offering a discount on the purchase price, and then waiting to see what the action will be. As a rule of thumb you can assume that usually around 20% discount is offered to consumers.
- Monitoring campaigns: during a promo action it is advisable to keep a close eye on the promotion. Especially with an eye on the competition. You want to make sure that all (or as many as possible) designated stores actually participate in the campaign and that they carry it out as agreed. You also need to check that aspects such as presentation (at the campaign location), correct pricing, availability of the articles for ordering at DC, etc. are running smoothly and as discussed.
- Evaluate promotions: If matters are not running smoothly, discuss with procurement. You are paying for the promotion, but more importantly, you want to be judged on the results of a successful promotion.
What will a promotion like this cost me? The brochure costs are usually borne by the supplier. For example for REWE (130 hypermarkets) this is 5000 EUR per promotion. Then work out what discounts you can provide.
Conclusion: promotion is an important tool in German Retail. Consider your promo plan thoroughly to discuss with the buyer. And stay on top of the implementation.