Specialty Retailer Maximizes Advertising Return on Investment
The Challenge
One of the leading specialty retailers in the United States was having a tremendous growth rate, both through expansion and same store sales growth. The company was performing well in the eyes of Wall Street investors.
However, they were still trailing the market leader and needed to learn how to maximize sales using their existing $225 million marketing and advertising budget.
The marketing adage of “half our advertising is wasted, we just don’t know which half”, was their mantra. They wanted to learn what elements of their advertising and marketing campaigns most effectively drove store traffic and sales.
The Strategy
The Fortune 500 retailer decided to use MSLLC techniques to test the effectiveness of print, radio and TV media. They also wanted to determine what types of content worked best in each media. The company executives settled on determining the effectiveness of the following types of media:
- Print Media (Newspaper and Tabloid)
- Mass Media (Television & Radio)
Management and employees from every function of the company were asked what ideas could be used to improve store traffic and bottom line sales. Amazingly, over 1,500 ideas were generated. Some general themes emerged that the management decided to test.
The Experiment
All in all, the retailer tested over 50 different ideas in almost 100 different stores. The experiments varied in size. The smallest experiment contained just 7 factors. The largest experiment contained 29 factors. Although each experiment had a different design, each one provided valuable insight into what worked, what didn’t work and what things just didn’t matter. Below is a sample of the ideas tested.
| Tabloid Ideas |
Option A |
Option B |
| Size |
6" x 9" |
10" x 12" |
| Page Count |
24 pages |
60 pages |
| Front Cover |
B&W |
4-Color |
| Return Policy |
On Cover |
Page 2 |
| Map to Store |
Front Cover |
Back Cover |
| |
|
|
| Newspaper Ideas |
Option A |
Option B |
| Ad Size |
1/4 page |
Full Page |
| Color |
B&W |
4-Color |
| Item Pricing |
Regular Price |
Sales Price |
| Ad Location |
Back Page |
Interior |
| |
|
|
| TV/Radio Ideas |
Option A |
Option B |
| Ad Timing |
Drive Time |
Non-Drive Time |
| Ad Message |
Brand Focus |
Item Focus |
| Saturation Level |
25% |
75% |
The Results
The company identified over $50 million of ineffective advertising. The good news though is they learned were to spend the money to increase store traffic and sales. A small, but powerful, part of some of the experiments tested different price points on specific items. The merchandisers learned how sensitive their customers were to changes in price, especially depending upon what types of competition existed in the market.