Say you are a brand manager.

12 months ago, you ordered 5,000 units of premium facial cream jars. The shipment arrived yesterday, but the market conditions changed. Demand for premium cosmetics dropped considerably.

The timing lag between forecasted demand and actual demand created a massive challenge.

You have too much inventory.

You adapt the sales forecast as you investigate options in different distribution challenges. Your goal is to reduce inventory by 20% - fast!

The best way is to run in-store promotions.

🤔Why In-Store Promotions are SO Effective?

In-store promotions are marketing activities that aim to increase sales by creating urgency, excitement, and fear of missing out.

For example, you can offer temporary discounts, loyalty rewards, product demonstrations, giveaways, and in-store events.

Done correctly, in-store promotions increase the Average Order Value and generate cash flow.

Most importantly, they help clear out inventory.

The challenge is that price promotions will reduce your profit margins and lower the perceived value of products and branding.

For example,

Say the brand manager negotiated an in-store promotion in a Costco store.

Usually, the brand sells 35 premium facial cream jars a month. This time, the store has 200 jars in inventory.

If the goal is to sell 100 jars quickly, you need to entice people who don’t normally buy your premium face cream to purchase.

An in-store promotion with a steep discount, scarcity (fear of missing out), and the bandwagon effect (do what others do) are what you need to fast-sell a product.

Why?

Because that would create an “Impulse Purchase.”

😃Behavior Analytics of "Impulse Purchases"

Impulse purchases are purchases you make without planning.

They often occur in physical stores where you can see, touch, and pay for the product.

Impulse purchases are influenced by your mindset, experience, and the love of getting a good deal.

For example,

You will probably be tempted to buy a well-known premium face cream at a steep discount if you love cosmetic products.

Impulse purchases are the driver behind the success of the promotion.

So,

How do you quantify Impulse Purchases?

Analytics of “Impulse Behaviors”

You define the who, where, when, what, and why of how people behave when they exhibit impulse purchases.

# People who exhibit impulse buying behaviors. In this scenario, you are looking for customer engagement attributes different from people who exhibit “habit purchase” behaviors.

# People in proximity to the promo display. The prominent location of the promotional display is the exposure to store visitors. In our Costco store example, the promotional display is located as you enter the store.

Engage Time is 45 to 120 seconds. The customer engagement to consider an impulse purchase tends to be longer than a habit purchase. But It depends on the product and local scenario, so understand your baselines.

# People with Optimal Engage Time. You narrow the activity to people who passed the promotional display and stopped for the optimal duration of an impulse consideration.

% Impulse Buyers to Store Visitors Ratio. The last step is the context. You connect the sales opportunity to your desired outcome.

After defining the parameters for Impulse Behaviors during the in-store promotion, the next step is understanding the store’s environment.

😎Win-Win-Win Alignment (So What?)

You start with your target KPI.

In our example, the brand manager wants to sell 100 premium face cream jars fast! She decided to run an in-store promotion with a 30% discount for 3 days.

In addition to their placement in the store, the brand manager negotiated with Costco to place the jars in the promotional aisle.

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She assumes that a 10% Sales Conversion Uplift will offset the costs of the discounts and promotion.

The brand manager needed to look beyond the product to calculate the sales and profit forecast. She evaluated her competition in the store.

# People engaged with cosmetics products

To quantify competition, you want to capture the behaviors of all the people engaging with cosmetics brands. The simple metric is to count the number of people who stopped in the cosmetics aisles.

You may want to narrow the data to people who only use facial cream products. It depends on your technology.

# People in proximity to the promotional aisle.

Because the brand manager wants to sell 100 jars over regular monthly purchases of 20 a month, the product is placed in the promo aisle for increased visibility.

Remember, product placement costs money.

In our example, the promotional display is at the main entrance to the store. In this case, you can use Store Visitors. Otherwise, use Proximity Traffic.

Distribution of Optimal Engage Times behaviors.

To define Impulse Behavior for the cosmetics product, you must first define Normal Purchasing Behavior (Habit Purchase).

You create a baseline of behaviors in the cosmetics and promotional aisle. Specifically, you want to define the time-based metrics for the normal and impulse behaviors.

# Purchases by price and location

The brand manager also cares about the baseline of purchases for her product, the cosmetics aisle, and the promotional aisle.

Remember, the goal of the in-store promotion is to entice people who don’t usually purchase premium facial cream to buy.

% Promo Purchases to Normal Purchases

The ratio of “people who bought during the in-store promotion to the normal purchase” is a magic metric.

The ratio identifies the “real impact” of the in-store promotion. Moreover, it is a baseline for creating future customers.

To recap,

To evaluate the in-store promotion for the facial cream product, the brand manager defines how to quantify impulse behaviors. Next, she quantified the competition and the local store environment.

She is now ready to define the promotion itself.

🤣PEACE for Profit (Get Started!)

To fast-sell 100 premium facial cream jars, the brand manager placed 150 jars and offered a 30% discount for three days for products placed in the cosmetics and promotion aisle.

The brand manager calculated that a 10% Sales Conversion uplift would cover the promotional costs and generate profit.

Here is the behavior-based analytical framework:

The sales amplification comes from a steep discount for a well-known brand and increased visibility in the promotional aisle.

🤑Amplify Store Sales

If your challenge is moving inventory, then in-store promotions done correctly are great for fast-sell products.

In our example,

Sales amplification was achieved because the premium product had enough markup to offer a steep discount. The store had the traffic volume to justify the placement costs in the promotional aisle. And the 3-day sale created scarcity, excitement, and fear of missing out.

To fast-sell 100 face cream jars, the brand manager took market share from competitors, got loyal buyers to purchase more, and enticed new customers to buy the premium face creams impulsively.

Cheers,

Ronny Max

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Behavior Analytics Academy trains people and teams to increase conversions, sales, and profits in physical environments. Build Profitable Ecosystems.

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