Word that the government's Cash for Clunkers program has run out of money contains a lesson for businesses. The program, which provides financial incentives to consumers to trade low gas mileage cars for more fuel efficient models, is well intended to reduce our dependence on oil. The $1 billion available has been snatched up quickly by eager consumers. The desire was to have $4 billion to fund the program, and it is looking like every dollar of that amount would have been used if allocated.
So, what's the problem here? We often encounter offers that suggest "hurry- quantities are limited- act now!" The problem is that a promotion poorly implemented can disappoint customers and lead to dissatisfaction with the business offering the deal. Remember KFC's botched grilled chicken giveaway this spring? The idea was brilliant, the execution was weak. The promotion had to be halted after a few days, leading to a great deal of negative publicity in the media and angry customers in stores. On top of that, KFC spent additional money mailing coupons to consumers for a free dinner to make good on the promotion.
The strategy behind sales promotions is relatively easy to understand. If a marketer can determine what incentives will move the target market to take action, it becomes a matter of creating awareness of the promotion. The more challenging part it seems is in the execution of promotions. Has enough money been budgeted to allow all customers that want to participate to do so (the answer is a definite "No" in the Cash for Clunkers program)? If the promotion is executed at retail, do employees understand the program and how to process the promotion for customers? Is additional inventory needed? Additional customer service help?
When a promotion goes very wrong like the KFC grilled chicken fiasco, one wonders if the brains behind the promotion ever spent any time on the front lines serving customers or if they fully understand the challenges faced. Great promotions can positively impact sales and generate excitement among customers, if implementation issues are thoroughly considered. Conversely, a promotion gone awry has the opposite effect of what was intended and efforts must be made to undo the damage to the brand.
Labels: Cash for Clunkers, Sales Promotion