The question of whether sales promotions are, or should be, tactical or strategic is old hat to those who work in the industry. They argue that most tactical promotions, in the accepted sense of the term, have a strategic element.
Put simply, the difference between the two is that strategic promotions are part of a planned brand-building exercise often run, or at least conceived, over a long period of time. The tactical approach, on the other hand, is a short-term measure, often used as a response to circumstances such as a competitor’s initiative or stock clearance on a discontinued line.
The reality is somewhat more blurred.
“It is extremely rare that a brief differentiates between strategic and tactical needs,” says Martin Banbury, chief executive of sales promotion agency Communicator. “We tend to work jointly with our key clients to develop objectives, formulate strategy and produce tactics.”
Banbury points to a recent promotion Communicator ran for Pepsi: “The company wanted to sell more products and knows that it does so when it is compared to ‘another leading brand’. Its overall objective is to sell more – the strategy, therefore, is to encourage comparison through trial, while dovetailing into the brand image by raising awareness of the Pepsi Challenge promotion. The tactic is the actual mechanic of the promotion.”
In most cases marketers would argue that encouraging trial is a tactical rather than strategic measure. It is a matter of semantics but
Pepsi saw this as a strategic move.
What was particularly interesting about the Pepsi promotion, however, was how it satisfied both elements.
The tactic involved an innovative coupon distributed door-to-door in which the recipient was given a choice. When torn one way it could be redeemed for a free can of Pepsi, alternatively it could be used as a money-off coupon on a multipack of Pepsi.
“This meant that non-trialists receive a strong incentive and existing customers are traded up,” says Banbury. “You could say the former is tactical and the latter is strategic.”
Henrik Nygaard, product group manager of MD Foods, UK distributors of Lurpak, claims all sales promotion is tactical.
“If you look at the objectives for a brand in a military context, it is like a war. The strategy is what you want to achieve in a three-to-five year period, that is, the long-term positioning of the brand; all the battles along the way are tactical. No promotion in itself will take you to where you want to be.”
Semantics apart, he agrees with Banbury on the importance of ensuring that promotions should be consistent with the brand’s image.
“The overall strategy is a communication exercise,” he says. “And all the tactics used along the way must adhere to this strategy.”
In the case of Lurpak, for example, MD Foods has defined a communication platform using the animated character, Douglas, as a brand spokesman to tell consumers that the product is a premium quality brand. “We decided to use him in every piece of communication we send out,” says Nygaard.
“In one recent initiative through Promotional Campaigns, we offered customers the chance to exchange a wrapper of any other brand for a pack of Lurpak. This included sending them a leaflet featuring Douglas. Although the communication was part of the strategic approach, it was tactical – it was designed for a short-term task.”
Peter le Conte, chief executive of Lovell Vass Boddey, believes such communication with the customer can have huge strategic potential.
“Using sales promotion strategically can be a wonderful way of getting data. For example, we recently ran a promotion for Lea & Perrins which was the first phase of an extensive data-capture campaign for its Worcester sauce brand.
“A sample pack, which included a mail-back coupon for a recipe book, a questionnaire, a 10p coupon and a recipe, was sent to 2 million targeted homes. The company, which already had good market penetration, wanted to increase the use of the product.
“The idea was to find out from the questionnaire who would be more likely to use the product in home cooking and encourage use through the recipe book. The promotion enabled the company to achieve its goal of data collection, which could be used in the longer term while simultaneously promoting wider use of the product.”
Perhaps the most interesting point about this promotion is that Lea & Perrins was not presented with any of the normal problems a brand faces. It was not squeezed by own-label products or other brands – its market consisted of loyal customers and yet there was still room for a promotion to increase use.
In most sectors of retailing, brand loyalty has to be fought for and then retained and it represents, perhaps, the biggest area of growth in recent promotional spend. Supermarkets, airlines and petrol retailers are the leading exponents of loyalty campaigns. According to secretary general of the Institute of Sales Promotion Sue Short, this concentration on strategic aims is a reaction to the recession.
“If you cast your mind back to those years, there were a lot of price promotions. The tactic was used to get people buying again but now the industry has moved on and there is a much greater concentration on loyalty.”
Loyalty promotions are without doubt long-term, strategic initiatives but there is concern that they might begin to turn people off. This follows growth in the US, where consumers ended up having so many loyalty cards they no longer carried them.
“In some people’s eyes they may have reached saturation point,” says Short. “But companies must understand customers’ needs and lock them into brands. Loyalty programmes can be a good way to achieve this.”
To retain interest in loyalty, Short believes tactical promotions will start to be used: “Cynics say loyalty has gone so far that it will require the loyalty equivalent of a price war. I think that the use of tactical promotions to add to loyalty programmes may be the answer. They must, however, sit comfortably into the scheme and enhance the strategy, not undermine it.”
The overuse of loyalty comes at a time when there is also much debate about the effect of constant discounting on brand image.
“It is possible to damage brands with badly conceived promotions, especially price promotions,” explains Short. “The consumer gets used to the low-price level or extra product. This is particularly the case with upmarket brands because discounting compromises the premium image.”
There are also those in the industry who think the constant use of tactical promotions is counter-productive.
“The main reason you shouldn’t focus solely on tactical promotions is that the approach doesn’t work,” says Sally Butcher, director of KLP.
“In the long term, it does nothing for the brand. You can get people to switch brands but the same will happen when a competitor does it. If you do one-off promotions you get one-off sales effects.
“This is particularly the case with brands that are squeezed between brand leaders and own-labels. I think they should be looking to develop and believe in a dedicated marketing. This is something you cannot do by just using tactical promotions.”
Another difficulty arising from the use of short-term activity is sourcing. The need to source cost-effectively, meet deadlines and guarantee quality is always difficult when things are rushed.
One way round the problem is to use catalogues, as Micky Rodrigues, marketing director at catalogue supplier DSL, which runs the Coca-Cola catalogue, points out.
“Balancing the needs of strategic and tactical promotions can be difficult,” he says. “For example, responding to a competitor’s tactics can result in a last-minute panic when it comes to sourcing premium items. Price and quality can suffer.
“Increasingly, companies are using promotional catalogues – stock is always on hand and can be used for strategic, long-term objectives – quality and brand image are consistent. But the premiums can be pulled off the shelves for tactical purposes or even individual retailers’ promotions.”
As with sourcing, the whole question of what is the right approach to promotion ultimately depends on the confidence a client has in its suppliers. Should it choose to appoint agencies on a long-term basis or use them tactically to handle one-off promotions? Again, there seem to be pros and cons.
“Clients have different attitudes and therefore what is right for one is not for another,” says director of promotional consultancy Fingerhut Associates David Lazarus.
“Often, the problem a client faces in a retainer relationship is complacency – they feel a lack of enthusiasm can creep into the agency because it does not need to strive so hard to win its next piece of work.
“Conversely, the agency has to invest time, research and resources into moving – fast – up a learning curve to deliver an appropriate response. Retainers who do work give clients more for their money as few agencies would ever say: ‘The hours paid for within the retainer have run out – how about some more money to finish the job?’. They simply continue and deliver.”
The nature of client/agency relationships varies so widely that it is impossible to come down on one side or the other in the debate over strategic versus tactical.
Both sorts of campaigns need to be thought through if they are to work, and if they do the results can be dramatic.