planning and creating a value proposition: the offer chapter 4 copyright© 2010 pearson education,...
TRANSCRIPT
Planning and Creating A Value Proposition: The Offer
Chapter 4
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Please Note:
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Opening Vignette
Smart Spacing Hangers
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What is the Offer?
The offer is the value proposition to the customer stating what you will give the customer in return for taking the action your marketing communication asks him/her to take.
It includes: The manner of presentation (media, creative, etc.) The request for a response
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Creating Need-Satisfying Offers
Is part of on-going customer relationship management (CRM) that drives the direct and interactive marketing process.
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When creating the Offer or Value Proposition …
Always remember
the 40/40/20 rule!
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The “40/40/20 Rule” states…
The success of any DM effort is determined by:
The right lists (40%) The right offer (40%) The right creative (20%)
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3 Characteristics of an Effective Offer (Lois Geller)
Believability It has to make sense to the consumer
Involvement It must attempt to get the customer
involved
Creativity It sets you apart from all the others
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Planning the Offer: 4 Steps1: Establish Objectives of the Offer
“What is the offer designed to do?” Continuity sell? Cross-sell? Up-sell?
2: Decide on Attractiveness of the Offer Make attractive as possible, as “freebies”
3: Reduce Risk of the Offer Offer free trial or examination period of offer a
money back guarantee4: Select a Creative Appeal
Offer appeals can be either rational or emotional
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Continuity Selling Continuity refers to offers that are
continued on a regular (weekly, monthly, quarterly, annually) basis.
AKA- “club offers” Examples
Book clubs, CD clubs, and magazine subscriptions
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Cross-Selling Cross selling is when new, related
or even unrelated products are offered to the customer.
Beneficial strategy of direct marketing for profit maximization from current customer base.
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Up-Selling Up-selling is the promotion of more
expensive products or services over the product or service originally discussed or purchased.
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8 Components of the Offer1. Product or Service2. Pricing/Payment Terms3. Trial or Examination Period4. Guarantees5. Sweepstakes or Contests6. Gifts and Premiums7. Time Limits8. Continuity
Let’s now examine each component …Copyright© 2010 Pearson Education,
Inc. Publishing as Prentice Hall
Product or Service It must satisfy the needs or wants
of the target consumer to whom it will be presented
Product or service features must be understood
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Pricing/Payment Terms Price skimming - begin price at highest
level Penetration strategy-begin with low price Price elasticity measures the consumer's
responsiveness or sensitivity to price changes
COD, BML, Delayed payment, & installments
Price expression in the offerCopyright© 2010 Pearson Education,
Inc. Publishing as Prentice Hall
Examples of Ways to Express Price in an Offer
Basic price statement “One year supply for only $12.99”
Price stated as a fraction “One-half off when ordered by May 1st”
Price stated by unit “Now only $2.49 an issue”
Price savings stated by percentage “Save 30% when ordered by May 1st”
Price savings stated by unit “First two issues are free”
Price savings stated by dollar amount “Save $25”
Price savings based on introduction “Save $15 on your initial subscription”
Price savings based on multiple purchases “Save $2.98 one two”
Price based on promotional offer “Buy one, get one free”
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Trial or Examination Period
Helps overcome the risk factor of DM
Very effective
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Guarantees
Instrumental in overcoming a potential buyer’s reluctance to purchase an unseen product from a remote location
Example: 30 day money back guarantee Double your money back
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Sweepstakes or Contests Often perforated tear-offs, die-
cuts, tokens, and stamps, as well as answers to questions, problems, or puzzles, are used.
Check state & local regulations.
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Gifts and Premiums Effective device
for stimulating or increasing response
Can be offered for buying, trying, or inquiring
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Time Limits A part of the offer
often involves limited quantity as well as specified time period
“While supplies last”
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Continuity Positive option-customer must
specifically request shipment for each offer in a series
Negative option- the shipment is sent automatically unless the customer specifically requests that it not be
more controversial
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5 Steps to Creating an Offer
1. Perform Market Research2. Determine the Terms of the Offer3. Target the Offer4. Test the Offer5. Execute the Offer
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Step 1: Perform Market Research
Analyze Customer Needs & Wants
Determine Customer Motivations
Develop Customer profile(s)
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Step 2: Determine the Terms of the Offer – (Product Details)
1. A choice of sizes2. A choice of colors3. Personalization4. Product Specifications5. Product Accessories
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Step 3: Targeting An Offer What am I selling?
Who am I selling to?
Why am I selling this now?
What do I want my Prospect to do?
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Step 4: Testing the Offer (A 4 Step Process)
1: Test only one feature at a time2: Code your tests so you can measure results3: Keep accurate records4: Analyze test results and take action
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Get ready to implement—many details to address!
“Roll-out”
Step 5: Execute the Offer
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Some Popular Offers Free gift Offers Other “free” Offers Discount Offers Sale Offers Sample Offers Time Limit Offers Guarantee Offers Build-Up-The-Sale Offer Sweepstakes Offers
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Case study
Old American Insurance Company
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