Sales promotions are an ever-growing marketing commitment for organisations, with spending accounting for up to 25% of all marketing budgets. We are all familiar with the idea of discounts, gifts and buy-one get one free offers, but one particular kind of sales promotions are shrouded in mystery, and is considered under-researched. Dr. Steve Ogden, from Deakin University’s Department of Management has been investigating competitions - the kind of promotion where customers can enter for the chance to win a prize based on their participation.
These campaigns seek to add value and interest and encourage engagement without reducing price. In the US, it is estimated that over 55 million people enter these promotions annually. UK researchers claim that 70% of consumers had entered one at some stage. Competitions are hugely popular with fantastic prizes on offer ranging from low value products to high value rewards including cash, cars, houses, holidays and money cannot buy experiences. They are so popular that a virtual community of ‘compers’ have evolved - dedicated die-hards for whom entering these promotions can be a hobby, a part-time job, or sometimes an addiction! They share their winning strategies and stories online and even meet socially to discuss life in the comping lane. The Australian Competitions Club for example has over 38,000 members – evidence of the power of (maybe) winning.
In an article to be published in the prestigious Journal of Promotion Management, Dr. Ogden reports research conducted over 5 years into why organisations use these campaigns and how they design competitions to attract both attention and entrants. While many sales promotions are carefully designed and closely evaluated, competitions seem to ‘slip through the net’, and are often developed without a clear understanding of the relationship between objectives, design and return on investment. This can mean that campaigns are poorly promoted, do not require much effort, investment, or effort from consumers and can, therefore, fail to deliver for the business.
On the other hand, consumers can benefit from low entry numbers, or capitalise on potential design flaws such as ‘no purchase required’ or ‘unlimited entries’. Dr. Ogden’s research aims to provide marketers with strong design frameworks to ensure that campaign design is not a ‘game of chance’, and that the benefits for both the organisation and the consumer are optimised. In the process of research, Dr. Ogden entered the world of the ‘comper’ to try his luck. The conclusion: Australia can be the lucky country for those who enter.