The psychology behind promotions – WHO do they work for?

POSTED: 28 February 2020

Since the first-ever coupon was distributed by Coca-Cola in 1887, promotions have become a standardized and expected part of our shopping trip. It is reported that two-thirds of consumers have made a purchase they weren't originally planning to make based solely on finding a coupon or discount. And four out of five Americans say finding a great offer or discount is on their mind throughout the entire purchase journey.  Promotions are powerful things.

In this third of five articles we look at who promotions work for. What is it about promotions that appeals to different people, what drives our purchasing behavior and how it is impacted by who we are?

Easy to read savings

This article forms part of a five-part series looking at the Who, Why, What, When and Where of promotions. Read the rest of the series ‘The psychology behind promotions’ here

 Who do promotions work for?

Promotions work on pretty much all of us. So that’s easy then. Choose whichever sales promotion you want and your customers will come flocking. Right? Unfortunately not. While, as humans, we are predisposed to find sales promotions appealing (read more about that in our WHY article from this series ), the type of promotions that attract us vary. By taking time to understand this you can ensure the promotions you run will have the maximum impact.

Target markets and demographics

These are not the same thing, and you need to properly assess and understand your customer base if your promotions are to be successful.  Demographics are generalized groups of people – when we hear terms like Millenials, GenX, Baby Boomers…these are generations that form part of demographics. Shopping and purchasing behavior varies by demographic. Baby boomers typically have more disposable income as their children have left home, and they are more likely to visit bricks and mortar stores to do their shopping. Millenials are more likely to prefer online shopping and are more influenced by social media activity.

The birth years for each generation are loosely as follows:

• GenZ (also know as iGen or Centennials) : Born 1996 – TBD
• Millenials (also GenY): Born 1977-1995
• Generation X (also GenX): Born 1965-1976
• Baby Boomers: Born 1946-1964
• Traditionalists (also Silent Generation): Born pre-1945

(Source: https://genhq.com/faq-info-about-generations/)

Understanding the typical ages of your customers is a useful start. Of course, caution needs to be taken as these generational brackets are wide and not all customers will fit neatly in to a box. Dig deeper in to the demographic of your shoppers and you can further understand race, gender, income bracket…all these things affect purchasing behavior. The more granular you can be, the better targeting you can undertake.

Also consider that the behavior of your customers may change as they age. GenX who are currently working all hours to save money for their kids’ college funds, eventually will have empty nests and more spare cash. Millenials will age and may then be in your target age bracket, and you may need to consider online activity to attract them in. So review your customers periodically and make sure the promotional activity you are doing is still hitting the mark.

Target audience is slightly different to demographics. Your target audience may include more than one demographic. And no, sorry, your target market cannot be ‘everyone’! You may have a wide appeal for sure, but if you take the time to look deeper, you’ll start to notice what links your different customer demographics. A certain income bracket perhaps, or a particular shared concern – the environment for example. The better you can understand what drives your customers, the more tailored your approach can be, and ultimately, the more impact you can have in influencing purchasing behavior. Time taken at this stage will be what reaps your rewards of maximized sales, increased footfall, and customer loyalty.

Working out what works

We can see the value of this special promotion

Depending on how granular you have gone in understanding your target market, will depend on what you do. If we start with generational marketing - so grouping together people only by age - we can make some topline generalizations. As an example;

Baby boomers have huge brand loyalty. Whilst they may have adopted technology, they were not raised using this technology and so it forms a less integral part of their lives and their purchasing habits. They aren’t likely to respond positively to your FaceBook ad, but they will to your newspaper ad. They respond well to upselling and loyalty programs, and less so to discounts as they are less budget focused.

GenX are an interesting bunch. They are young enough to have got to grips with the use of technology throughout their lives, yet they are old enough to remember regular visits to the store throughout their childhood. Coupons work well for this generation, as does email marketing – checking their emails for work throughout the day means your emails are also likely to get noticed. They are also driven by do-good brands – think ethical, organic, environmentally friendly; aligning with their interests will increase your appeal.

Millenials are technology driven. Online shopping, zapping QR codes, following influencers, checking out online reviews…you get the picture. Millenials are most likely to respond to user generated content – and also most willing to make their own recommendations on social media. Beware, conversely they are also most likely to complain on social media too, so ensure you are seen to be responsive.

But remember, these generalizations are just that, generalizations. Within each generation you have very different types of people, so generational marketing can help but the biggest results will come if you can dig deeper than the age of your customers. Understand what drives them. And test different approaches. What is sparking your customers. % off, save X, get Y free when you buy Z – do your customers respond? Special events for regular customers? Social media campaign with a reward when they visit in-store?

Consider too how you present your signs and promotions in-store. The way your shop floor looks is a reflection of your store persona. The way you look needs to align with your customers expectations. A dollar store will present itself very differently to a high-end perfumery for example. Is your in-store environment conveying the right impression and are your in-store promotions being communicated in the way you had intended?

Easy to understand promotion

Key takeaway

By taking the time to understand your target market, to properly assess who your customers are and what drives them, places you in a position where you can build campaigns that will appeal directly to them. Rather than running a campaign and hoping it will reap results, you can invest in activity that you know from the outset will bring the results you want. And when you are providing what your customers like and want, they will return time and again, cementing brand loyalty.

Objectively review your shop floor. You have taken the time to identify your target market, and you have put in place marketing strategies to appeal to them, make sure your in-store environment is working to help you.  Are the promotions clear? Are your signs consistent? How is your brand presenting itself to your target market? Using good quality sign holders, such as Reflex, means you can present your signs clearly around the store and have confidence that your signs will stay in place even when knocked by shoppers. For more tips read our FREE guide ‘How to maximize sales from your existing footfall’

Want to know WHEN the best times are to run promotions? Find out more in the fourth article of this series.

This article forms part of a five-part series looking at the Who, Why, What, When and Where of promotions. Read the rest of the series ‘The psychology behind promotions’ here (The links will be updated when we release the articles):

1. Why
2. What
3. Who (This article)
4. When
5. Where

Coca Cola image credit: Wiki commons