Marketing’s competitive edge

COMPETITIONS may be growing in popularity as a marketing tool, but a range of pitfalls can often accompany their benefits.

Key competition benefits include opportunities to communicate with customers, reinforce the brand, increase sales and shop traffic, and build a database.

However, a poorly organised competition can disenfranchise customers and even place the company running the promotion in breach of the law.

Marketing Centre managing director Michael Smith said competitions could be a great promotional tool.

“In most cases competitions are being used to build databases. At other times they are used to draw attention to mediums such as television, radio, newspapers,” he said.

“Sometimes competitions are used to generate traffic. They can also be useful to get people to trial new products.”

Devahasdin PR principal Sandra Devahasdin said she was a great believer in using competitions as a promotional tool.

“Promotions have to increase circulation and sales and competitions are a good way to do that,” she said.

“They can be a cost effective way to get the company’s message across. You need good photography and a strong headline and within the coupon you have to make it very easy for the person to enter.

“If the entrant needs to answer some questions, the answers to those questions need to be easily found in the copy supporting the coupon.

“One of the benefits of this is it shows the entrants are reading the promotional material and taking it in. That helps to reinforce the promotion’s message.”

Ms Devahasdin said a competition had to be a win-win situation for the contestants and the company offering the promotion.

“You need to have the right product to match the outlet,” she said.

“Good products to use are holidays or overnight stays or something money can’t buy, such as a chance to meet a celebrity.”

Market Force strategic planning director Ron Duncan said there were no hard-and-fast rules with competitions.

“I’ve mainly used them to build up databases but they can be useful to push other things,” he said.

Competitions have become a vital fundraising tool for charity organisations.

Rocky Bay public relations and fundraising manager Betty Cottrell said the charity had been using raffles as a major source of fund-raising for the past 20 years.

“About 50 per cent of our fundraising comes through raffles,” Ms Cottrell said.

However, while competitions can be a great promotional tool, there is also a risk that they can go wrong.

One media promotion where contestants had to scoop money out of a barrel within a specified amount of time cost more than anticipated when it rained during the competition, causing the bank notes to stick together and making the contestants’ job easier.

Mr Smith said one of the biggest problems with competitions arose when either the administration of the competition or the prizes offered failed to satisfy customers.

“Prizes that offer less than the value the competitors expected are a sure way to disappoint winners,” he said.

“It’s a fine balance between creating a competition where contestants think they have a chance to win and one that offers a sufficient prize to draw interest.

“If people don’t think they can win they won’t enter.”

Mr Smith said another problem facing competition organisers was the emerging legion of professional competition entrants.

“They have the time and interest to enter competitions and manage to clog competitions by putting in – in some cases – amazing numbers of entries.”

Ms Devahasdin said professional competition entrants did pose a problem but not enough to create a disincentive to run competitions.

However, she said competition organisers had to take a crisis management-like approach to ensure their competition did not alienate customers.

“You need to think of all of the things that can go wrong, right from the creation of the competition through to the presenting and use of the prize,” Ms Devahasdin said.

“The terms and conditions of the competition need to be foolproof.”

There are also legal aspects to running competitions.

Australia’s new Privacy Act makes the use of competitions to generate databases a little harder.

Deputy privacy commissioner Bernard Silva said in many cases companies could get around Privacy Act problems by informing people about who they were and why they were collecting the information, and giving them the option of whether they wanted their personal information added to a database.

There are also State laws covering the use of competitions. These laws are administered through the Department of Racing, Gaming and Liquor.

In some cases a permit may be needed to run a trade promotion competition.