Planning and Creating A Value Proposition: The Offer Chapter 4 Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

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

Opening Vignette Smart Spacing Hangers Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

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

Creating Need-Satisfying Offers Is part of on-going customer relationship management (CRM) that drives the direct and interactive marketing process. Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

When creating the Offer or Value Proposition … Always remember the 40/40/20 rule! Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

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

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

Planning the Offer: 4 Steps 1: 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 guarantee 4: Select a Creative Appeal Offer appeals can be either rational or emotional Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

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

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

Up-Selling Up-selling is the promotion of more expensive products or services over the product or service originally discussed or purchased. Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

8 Components of the Offer 1. Product or Service 2. Pricing/Payment Terms 3. Trial or Examination Period 4. Guarantees 5. Sweepstakes or Contests 6. Gifts and Premiums 7. Time Limits 8. 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 Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

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

Trial or Examination Period Helps overcome the risk factor of DM Very effective Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

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

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

Gifts and Premiums Effective device for stimulating or increasing response Can be offered for buying, trying, or inquiring Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Time Limits A part of the offer often involves limited quantity as well as specified time period “While supplies last” Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

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

5 Steps to Creating an Offer 1. Perform Market Research 2. Determine the Terms of the Offer 3. Target the Offer 4. Test the Offer 5. Execute the Offer Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Step 1: Perform Market Research Analyze Customer Needs & Wants Determine Customer Motivations Develop Customer profile(s) Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Step 2: Determine the Terms of the Offer – (Product Details) 1. A choice of sizes 2. A choice of colors 3. Personalization 4. Product Specifications 5. Product Accessories Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

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

Step 4: Testing the Offer (A 4 Step Process) 1: Test only one feature at a time 2: Code your tests so you can measure results 3: Keep accurate records 4: Analyze test results and take action Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

Get ready to implement— many details to address! “Roll-out” Step 5: Execute the Offer Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall

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

Case study Old American Insurance Company Copyright© 2010 Pearson Education, Inc. Publishing as Prentice Hall