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Planning and Creating A Value Proposition: The Offer

Chapter 4Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

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 responseCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall


Creating Need-Satisfying OffersIs 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


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)BelievabilityIt has to make sense to the consumerToo much freebies can confused the customers.InvolvementIt must attempt to get the customer involved Half price is much better than 10-15% discount.CreativityIt sets you apart from all the others.Most creative offers gets the biggest response exclusive



Planning the Offer: 4 Steps1: Establish Objectives of the OfferWhat is the offer designed to do?Repeat purchase? Introduce and sell new product? Raise funds?2 common methods: encourage repeat purchase and buying additional productContinuity sell? Cross-sell? Up-sell?



Continuity SellingContinuity refers to offers that are continued on a regular (weekly, monthly, quarterly, annually) basis.AKA- club offersExamplesBook clubs, CD clubs, insurance policy, and magazine subscriptions.Positive options : customer must request a shipment of product offers.Negative options : shipment is sent aoutomatically. A till forbid (TF)Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall


Cross-SellingCross 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-SellingUp-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


Planning the Offercont2: Decide on Attractiveness of the OfferMake attractive as possible, as freebies

3: Reduce Risk of the OfferOffer free trial or examination period of offer a money back guarantee

4: Select a Creative AppealOffer appeals can be either rational or emotional

Contemporary Direct Marketing - Chapter 04

Contemporary Direct Marketing - Chapter 04

8 Components of the OfferProduct or ServicePricing/Payment TermsTrial or Examination PeriodGuaranteesSweepstakes or ContestsGifts and PremiumsTime LimitsContinuityLets now examine each component Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall


Product or ServiceIt must satisfy the needs or wants of the target consumer to whom it will be presentedProduct or service features must be understood physical features + extended properties (girt wrapping, delivery etcService: types of service, duration, frequency, location.



Pricing/Payment TermsPrice skimming - begin price at highest levelPenetration strategy-begin with low price Price elasticity measures the consumer's responsiveness or sensitivity to price changesCOD, BML, Delayed payment, & installmentsPrice expression in the offerCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall


Examples of Ways to Express Price in an OfferBasic price statement One year supply for only $12.99Price stated as a fraction One-half off when ordered by May 1stPrice stated by unitNow only $2.49 an issuePrice savings stated by percentage Save 30% when ordered by May 1stPrice savings stated by unit First two issues are freePrice savings stated by dollar amount Save $25Price savings based on introductionSave $15 on your initial subscriptionPrice savings based on multiple purchasesSave $2.98 one twoPrice based on promotional offerBuy one, get one freeCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall


GuaranteesInstrumental in overcoming a potential buyers reluctance to purchase an unseen product from a remote locationExample:30 day money back guaranteeDouble your money backCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall


Sweepstakes or ContestsOften 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 PremiumsEffective device for stimulating or increasing responseCan be offered for buying, trying, or inquiring



Time LimitsA part of the offer often involves limited quantity as well as specified time periodWhile supplies last



ContinuityPositive option-customer must specifically request shipment for each offer in a seriesNegative option- the shipment is sent automatically unless the customer specifically requests that it not bemore controversial Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall


5 Steps to Creating an OfferPerform Market ResearchDetermine the Terms of the OfferTarget the OfferTest the OfferExecute the Offer



Step 1: Perform Market Research

Analyze Customer Needs & WantsDetermine 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)A choice of sizesA choice of colorsPersonalizationProduct SpecificationsProduct AccessoriesCopyright 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 time2: Code your tests so you can measure results3: Keep accurate records4: Analyze test results and take actionCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall


Get ready to implementmany details to address!

Roll-out Step 5: Execute the OfferCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall


Some Popular OffersFree gift OffersOther free OffersDiscount OffersSale OffersSample OffersTime Limit OffersGuarantee OffersBuild-Up-The-Sale OfferSweepstakes OffersCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall


Case study

Old American Insurance CompanyCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall


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