Well I certainly opened up a can of words in my last blog. What a response!
Here is the gist of the responses I got:
1. Franchisors run national promotions in conjunction with their suppliers with little regard to the franchisee who bears the costs of stock holding at the end of the promotional period
2. These promotions are supplier driven as opposed to being customer driven
3. They do not “drive” feet to the door
As regards bank charges – well you can just imagine what owners and managers had to say in this regard. In many ways these charges are scandalous to say the least. But bank charges and costs will be the subject of another blog.
As regards a Bp service station charging me an extra 5% on my fuel transaction – I have since stopped at another three Bp service stations to ask if they take my debit cheque card for fuel – and all said no. From this I infer that the Franchisor along with their franchisees have decided not to accept these cards as a form of payment for fuel.
This should be explained properly – at the pumps. There needs to be a sign saying we take all debit cards except – cheque debit cards etc.
However, today I want to look at national franchisor driven promotions in our country in particular.
Let’s go back to basics and revisit why we in fact have promotions at all.
“Generally, a promotion is communicating with the public in an attempt to influence them toward buying our products and/or services.”
So we take a reduced margin in the hope that we will get customers to buy more of that product when they get to our store. We want to drive feet through that door.
So please explain to me how buying two of a product and getting one free – gets me to stop at your service station, when I only know about it when I get to the pay point?
I really can’t see the point of these promotions anymore, can you?
How many of you even bother calculating your breakeven point on each product line before the promotion runs? We used to do that as a matter of normal business some years ago – but when I ask franchisors today, they look at me with a blank face as if I am asking a silly/stupid/ blonde question.
The look says it all – why do I have to even know my breakeven point on each line? If we don’t know our breakeven point – how can we tell if they are profitable or not? If we can’t make money out of them, why do them?
We run promotions to achieve the following:
1. Increased ATV – to increase our average transaction value
2. Increase our sales
3. Keep our primary customers coming back time and again
If we do not achieve these, why do them?
We cannot compete on price with our supermarkets on known value items – so should we be doing these product lines at all? Why take a reduction in margin if our sales do not increase, our ATV does not improve and it does not improve loyalty to our store?
Who is driving these promotions? Whose interest does it serve?
My last questions are the following:
1. Who decides which products go on promotion? Why put Coke on promotion for example when it remains our number one top seller? And some even run these in the month of December?
2. Are we pandering to major suppliers?
3. Where is the imagination in these promotions?
4. Why can’t we get the displays right?
Can somebody out there please explain to me the benefits of running these non imaginative and repetitive promotions? I just cannot see how they benefit the branded networks as they currently exist.
It is time for us to grow up and be a part of the real world that our customers inhabit!
Take care out there and keep looking at the detail!