Planning and Creating A Value

Proposition: The Offer

Chapter
4

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Inc. Publishing as Prentice Hall

Please Note:

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Inc. Publishing as Prentice Hall

Opening Vignette
Smart Spacing
Hangers

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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
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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.

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Inc. Publishing as Prentice Hall

When creating the Offer or

Value Proposition
Always
remember
the
40/40/20
rule!
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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

Too much freebies can confused the customers.

Involvement

It must attempt to get the customer involved

Half price is much better than 10-15% discount.

Creativity

It sets you apart from all the others.

Most creative offers gets the biggest response
exclusive
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Inc. Publishing as Prentice Hall

Planning the Offer: 4

Steps
1: Establish Objectives of the Offer

What is the offer designed to do?

Repeat purchase? Introduce and sell new
product? Raise funds?
2 common methods: encourage repeat purchase
and buying additional product
Continuity sell? Cross-sell? Up-sell?

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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, 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)
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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.
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Up-Selling

Up-selling is the promotion of more

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

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Inc. Publishing as Prentice Hall

Planning the Offercont

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

Contemporary Direct
Marketing - Chapter 04

8 Components of the Offer

1.
2.
3.
4.
5.
6.
7.
8.

Product or Service
Pricing/Payment Terms
Trial or Examination Period
Guarantees
Sweepstakes or Contests
Gifts and Premiums
Lets now
Time Limits
examine
each
Continuity
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Inc. Publishing as Prentice Hall

component

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 physical features +
extended properties (girt wrapping,
delivery etc
Service: types of service, duration,
frequency, location.
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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
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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

Price savings stated by percentage Save 30% when ordered by May 1st

Price savings stated by unit

Price savings stated by dollar amount

Price savings based on introduction Save $15 on your initial subscription

Price savings based on multiple purchases

Price based on promotional offer

Now only $2.49 an issue

First two issues are free

Save $25

Save $2.98 one two

Buy one, get one free

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Inc. Publishing as Prentice Hall

Trial or Examination
Period

Helps overcome the risk factor of

DM
Very effective

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Inc. Publishing as Prentice Hall

Guarantees

Instrumental in overcoming a
potential buyers reluctance to
purchase an unseen product from
a remote location
Example:

30 day money back guarantee

Double your money back

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Inc. Publishing as Prentice Hall

Sweepstakes or
Contests

Often perforated tear-offs, diecuts, tokens, and stamps, as well

as answers to questions,
problems, or puzzles, are used.
Check state & local regulations.

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Inc. Publishing as Prentice Hall

Gifts and Premiums

Effective device
for stimulating or
increasing
response
Can be offered for
buying, trying, or
inquiring

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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

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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
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Inc. Publishing as Prentice Hall

5 Steps to Creating an
Offer
1.
2.
3.
4.
5.

Perform Market Research

Determine the Terms of the Offer
Target the Offer
Test the Offer
Execute the Offer

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Inc. Publishing as Prentice Hall

Step 1: Perform Market

Research

Analyze Customer
Needs & Wants
Determine
Customer
Motivations
Develop Customer
profile(s)
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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
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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?

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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
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Step 5: Execute the Offer

Get ready to implement
many details to address!
Roll-out
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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
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Inc. Publishing as Prentice Hall

Case study

Old American Insurance

Company

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Inc. Publishing as Prentice Hall