PROMOTE!
How to Plan A Successful Promotion- Part I Strategy
Participant Workbook
The Workbook will Demonstrate 3 Steps to Planning a Successful Promotion
Step 1: Set Promotion Budget
Step 2: Create The Promotion Offer
Step 3: Create Your Timeframe and Customer List
Step 1: Set overall promotion budget
Margin Structures Worksheet
Example: Mesa
Distributor Material Cost Estimate / Material Sell Price – 20% MarginPER SF / PER CTN* / PER SF / PER CTN*
$0.75 / $36.00 / $0.94 / $45.00
· Mesa is packaged 48 SF/CTN or 64 SF/CTN. Examples based on 48 SF/CTN.
· Distributor margin varies. Examples based on 20% margin.
Product: ______
Distributor Material Cost Estimate / Material Sell Price – 20% MarginPER SF / PER CTN* / PER SF / PER CTN*
$ / $ / $ / $
Product: ______
Distributor Material Cost Estimate / Material Sell Price – 20% MarginPER SF / PER CTN* / PER SF / PER CTN*
$ / $ / $ / $
Product: ______
Product: ______
Distributor Material Cost Estimate / Material Sell Price – 20% MarginPER SF / PER CTN* / PER SF / PER CTN*
$ / $ / $ / $
Product: ______
Distributor Material Cost Estimate / Material Sell Price – 20% MarginPER SF / PER CTN* / PER SF / PER CTN*
$ / $ / $ / $
Product: ______
Distributor Material Cost Estimate / Material Sell Price – 20% MarginPER SF / PER CTN* / PER SF / PER CTN*
$ / $ / $ / $
Based on this analysis, can you identify best product candidates for your promotion?
Promotion Fund Worksheet
Goal: Based on a percentage of the total margin contribution from quantity sold, determine prize structure/levels.
Example: Mesa
Contractor Purchases / Distributor Promotion Fund Based on Total Cartons SoldCartons / Total SF / 5% of margin* / 7% of margin* / 9% of margin*
1 / 48 / $0.46 / $0.63 / $0.81
25 / 1200 / $11.25 / $15.75 / $20.25
50 / 2400 / $22.50 / $31.50 / $40.50
100 / 4800 / $45.00 / $63.00 / $81.00
150 / 7200 / $67.50 / $94.50 / $121.50
200 / 9600 / $90.00 / $126.00 / $162.00
250 / 12000 / $112.50 / $157.50 / $202.50
300 / 14400 / $135.00 / $189.00 / $243.00
350 / 16800 / $157.50 / $220.50 / $283.50
400 / 19200 / $180.00 / $252.00 / $324.00
450 / 21600 / $202.50 / $283.50 / $364.50
500 / 24000 / $225.00 / $315.00 / $405.00
*calculation: $0.94 - $0.75 x total SF x margin contribution fund (0.05, 0.07 or 0.09).
· Establish from these values the low prize level payout (i.e.; $25 value) and the high prize level (i.e.; $500 value) based on a contractor company’s total purchases during the promotion period.
· Customers receive prizes based on accumulated purchases, so say a company purchases twice the number of cartons of the highest prize level. This company would be eligible for $1,000 in total prizes (perhaps a gift certificate, golf club, etc).
Contractor Purchases / Distributor Promotion Fund Based on Total Cartons SoldCartons / Total SF / 5% of margin* / 7% of margin* / 9% of margin*
1 / 48
25 / 1200
50 / 2400
100 / 4800
150 / 7200
200 / 9600
250 / 12000
300 / 14400
350 / 16800
400 / 19200
450 / 21600
500 / 24000
Contractor Purchases / Distributor Promotion Fund Based on Total Cartons Sold
Cartons / Total SF / 5% of margin* / 7% of margin* / 9% of margin*
1 / 48
25 / 1200
50 / 2400
100 / 4800
150 / 7200
200 / 9600
250 / 12000
300 / 14400
350 / 16800
400 / 19200
450 / 21600
500 / 24000
ontractor Purchases / Distributor Promotion Fund Based on Total Cartons Sold
Cartons / Total SF / 5% of margin* / 7% of margin* / 9% of margin*
1 / 48
25 / 1200
50 / 2400
100 / 4800
150 / 7200
200 / 9600
250 / 12000
300 / 14400
350 / 16800
400 / 19200
450 / 21600
500 / 24000
Contractor Purchases / Distributor Promotion Fund Based on Total Cartons Sold
Cartons / Total SF / 5% of margin* / 7% of margin* / 9% of margin*
1 / 48
25 / 1200
50 / 2400
100 / 4800
150 / 7200
200 / 9600
250 / 12000
300 / 14400
350 / 16800
400 / 19200
450 / 21600
500 / 24000
Evaluate cost effectiveness to reach a target audience
How many customers would you like included in your open house kick-off event and subsequent mailings? Do you want to take a targeted approach or a mass approach? If you have more than one branch, would you prefer to conduct a promotion at one branch – rather than multiple locations – during the promotion period? Certainly the more locations involved will require more coordination and additional invested dollars.
Example: Hypothetical look at cost to target vs. mass approach- you’ll have empty charts below to plug in your actual numbers to determine your actual budget.
Target Audience Determination Worksheet
Targeted Approach: Focused List of Prospective CustomersMass Approach: Greater Number of Prospective Customers
Number of Firms / Kick-off Event / Printed Materials / Prizes / Total Cost
Per
Person / Total / Per Person / Total / Per Prize (Level3) 50% of attendees / Total
50 / $10 / $500 / 2.10 / $105 / 25 @$25 / $625 / $1,230
100 / $10 / $750 / 2.08 / $208 / 50 @$25 / $1,250 / $2,208
250 / $10 / $1,250 / 2.06 / $515 / 125 @$25 / $3,125 / $4,890
500 / $10 / $2,000 / 2.04 / $1,020 / 250 @$25 / $6,250 / $9,270
1,000 / $10 / $2,800 / 1.95 / $1,950 / 500 @$25 / $12,500 / $17,250
2,500 / $10 / $3,500 / 1.87 / $4,675 / 1,250@ $25 / $31,250 / $39,425
Targeted Approach: Focused List of Prospective Customers
Number of Firms / Kick-off Event / Printed Materials / Rewards / Total
Per Person / Total / Per Person / Total / Per Prize / Total
50
100
250
Mass Approach: Greater Number of Prospective Customers
Number of Firms / Kick-off Event / Printed Materials / Rewards / Total
Per Person / Total / Per Person / Total / Per Prize / Total
500
1000
2500
Total Your Costs
Total all your costs associated with your approach: either targeted or mass audience.
How many customers will you target? Use this number to work further through cost estimated for all materials you’ll need for the first two phases. (We will talk later about determination of reward cost structures.)
Phase 1: Awareness Open House Event / Phase 2: ContinuityMaintain Momentum / Phase 3: Rewards
Recognize Winners
Promotion Element / Cost of Element / Promotion Element / Cost of Element / Promotion Element / Cost of Element
Posters (6) / $240 / Direct mail (3) / $300
Counter signs (2) / $210 / Bill stuffers / $250
Flyers (100) / $214 / Flyers / $250
Invites (2/person) / $ 212 / Giveaways / $300
Bill stuffers (400) / $240 / Other / $500
Entertainment / $500
Food / $1000
Chairs/tables / $200
Door prizes / $700
Other
Total / $3,516 / $1600
Phase 1: Awareness Open House Event / Phase 2: Continuity
Maintain Momentum / Phase 3: Rewards
Recognize Winners
Promotion Element / Cost of Element / Promotion Element / Cost of Element / Promotion Element / Cost of Element
Posters / Direct mail (3) / Level 1 prizes
Counter signs / Bill stuffers / Level 2 prizes
Flyers / Flyers / Level 3 prizes
Invites (2) / Giveaways / Other
Bill stuffers / Other
Entertainment
Food
Chairs/tables
Door prizes
Other
Total
Phase 1: Awareness Open House Event / Phase 2: Continuity
Maintain Momentum / Phase 3: Rewards
Recognize Winners
Promotion Element / Cost of Element / Promotion Element / Cost of Element / Promotion Element / Cost of Element
Posters / Direct mail (3) / Level 1 prizes
Counter signs / Bill stuffers / Level 2 prizes
Flyers / Flyers / Level 3 prizes
Invites (2) / Giveaways / Other
Bill stuffers / Other
Entertainment
Food
Chairs/tables
Door prizes
Other
Total
Phase 1: Awareness Open House Event / Phase 2: Continuity
Maintain Momentum / Phase 3: Rewards
Recognize Winners
Promotion Element / Cost of Element / Promotion Element / Cost of Element / Promotion Element / Cost of Element
Posters / Direct mail (3) / Level 1 prizes
Counter signs / Bill stuffers / Level 2 prizes
Flyers / Flyers / Level 3 prizes
Invites (2) / Giveaways / Other
Bill stuffers / Other
Entertainment
Food
Chairs/tables
Door prizes
Other
Total
Estimate Potential Payout for Prizes
For a very low cost per customer at a small adjustment in your margin, promotions easily pay for themselves. In addition, consider the replacement business at the higher unit value of Mesa versus other low end ceilings. Profit on Mesa is higher than for Cortega or other lower end products. Higher average unit value sold in the market raises profits.
Mesa example: profit schedule for 50 target customers in the market at 20% margin
Measure / Prize Level 1 / Prize Level 2 / Prize Level 3 / No PrizesPercent of 50 that qualify / 10% - 5 / 30% - 15 / 50% - 25 / 10% - 5
Purchases at this prize level / 500 cartons / 300 cartons / 100 cartons / < 100 cartons
Margin on total purchases / · $9/ctn margin x
· 500 ctns sold x
· 5 customers = $22,500 profit / · $9/ctn margin x
· 300 ctns sold x
· 15 customers = $40,500 profit / · $9/ctn margin x
· 100 ctns sold x
· 25 customers = $22,500 profit / None sold [or fewer than 100], so no/less revenue generated. No payout this level.
Mesa example: margin adjustment with total costs of the promotion
Measure / Prize Level 1 / Prize Level 2 / Prize Level 3Total revenue / $22,500.00 / $40,500.00 / $22,500.00
Total costs* / - $887.50 / - $2,662.50 / - $4,437.50
Total profit / $21,612.50 / $37,837.50 / $18,062.50
Net margin / 20% / 20% / 20%
Gross margin / 19.2% / 18.7% / 16.1%
Say total costs* equal $8,875 based on the following assumptions:
· Open House event, POP, and banners (Awareness phase) - $3,500
· Direct mail (Continuity phase) - $750
· Prizes (Reward phase) – $4,625
o 5 x $500 = $2,500
o 15 x $100 = $1,500
o 25 x $25 = $625
Total cost per participating or targeted customer = $8,875/50 = $177.50
· Level 1: $177.50 x 5 = $887.50
· Level 2: $177.50 x 15 = $2,662.50
· Level 3: $177.50 x 25 = $4,437.50
Gross margin adjustment calculations:
· Level 1: $21,612.50 x .20 / $22,500 = 19.2%
· Level 2: $37,837.50 x .20 / $40,500 = 18.7%
· Level 3: $18,062.50 x .20 / $22,500 = 16.1%
Rewards Estimates Worksheet
___ target customers in the market at ___ margin
Measure / Prize Level 1 / Prize Level 2 / Prize Level 3 / No PrizesPercent of 50 that qualify / 10% - __ / 30% - ___ / 50% - ___ / 10% - ___
Purchases at this prize level / _____ cartons / ______cartons / _____ cartons / _____ cartons
Margin on total purchases / · $/ctn margin x
· x ctns sold x
· X customers = $20,250 profit / · $/ctn margin x
· x ctns sold x
· X customers = $40,500 profit / · $/ctn margin x
· 100 ctns sold x
· x customers = $22,500 profit / None sold [or fewer than 100], so no/less revenue generated. No payout this level.
Mesa example: margin adjustment with total costs of the promotion
Measure / Prize Level 1 / Prize Level 2 / Prize Level 3Total revenue / $ / $ / $
Total costs*
Total profit
Net margin
Gross margin
Tally total costs by adding in other associated costs, including:
· Open House event, POP, and banners (Awareness phase) - $
· Direct mail (Continuity phase) - $
· Prizes (Reward phase) – $
o 5 x $500 = $
o 15 x $100 = $
o 25 x $25 = $ ______
Total costs:
Total cost per participating or targeted customer /number of participants
· Level 1: $ x number of earners = $
· Level 2: $
· Level 3: $
· Gross margin adjustment calculations:
· Level 1: $
· Level 2: $
· Level 3: $
Now you can complete the last part of your calculation:
Phase 1: Awareness Open House Event / Phase 2: ContinuityMaintain Momentum / Phase 3: Rewards
Recognize Winners
Promotion Element / Cost of Element / Promotion Element / Cost of Element / Promotion Element / Cost of Element
Posters (6) / $240 / Direct mail (3) / $300 / Level 1 prizes
(5) @ $500 / $2,500
Counter signs (2) / $210 / Bill stuffers / $250 / Level 2 prizes
(15) @ $100 / $1500
Flyers (100) / $214 / Flyers / $250 / Level 3 prizes
(25) @ $25 / $625
Invites (2/person) / $ 212 / Giveaways / $300 / Other (5)
Bill stuffers (400) / $240 / Other / $500
Entertainment / $500
Food / $1000
Chairs/tables / $200
Door prizes / $700
Other
Total / $3,516 / $1600 / $4625
Awareness Promotion Phase: Open House Event / Continuity Promotion Phase: Maintain momentum / Reward Promotion Phase: Recognize winners
Promotion Element / Cost of Element / Promotion Element / Cost of Element / Promotion Element / Cost of Element
Posters / Direct mail (3) / Level 1 prizes
Counter signs / Bill stuffers / Level 2 prizes
Flyers / Flyers / Level 3 prizes
Invites (2) / Giveaways / Other
Bill stuffers / Other
Entertainment
Food
Chairs/tables
Door prizes
Other
Total
Step 2: Create the promotion offer
Choose your product or focus
Select from the following products: