Planning and Creating A Value Proposition: The Offer Chapter 4 Copyright© 2010 Pearson Education,...

Planning and Creating A Value Proposition: The Offer

Chapter 4

Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Please Note:


Opening Vignette

Smart Spacing Hangers


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


Creating Need-Satisfying Offers

Is part of on-going customer relationship management (CRM) that drives the direct and interactive marketing process.


When creating the Offer or Value Proposition …

Always remember

the 40/40/20 rule!


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%)


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


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


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


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.


Up-Selling Up-selling is the promotion of more

expensive products or services over the product or service originally discussed or purchased.


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


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”


Trial or Examination Period

Helps overcome the risk factor of DM

Very effective


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


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.


Gifts and Premiums Effective device

for stimulating or increasing response

Can be offered for buying, trying, or inquiring


Time Limits A part of the offer

often involves limited quantity as well as specified time period

“While supplies last”


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


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


Step 1: Perform Market Research

Analyze Customer Needs & Wants

Determine Customer Motivations

Develop Customer profile(s)


Step 2: Determine the Terms of the Offer – (Product Details)

1. A choice of sizes2. A choice of colors3. Personalization4. Product Specifications5. Product Accessories


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?


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


Get ready to implement—many details to address!

“Roll-out”

Step 5: Execute the Offer


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


Case study

Old American Insurance Company


Planning and Creating A Value Proposition: The Offer Chapter 4 Copyright© 2010 Pearson Education,...

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