The Lottery has changed Britain. Hardly a day goes by without another product jumping on the instant win bandwagon. In the year since the National Lottery sold its first ticket, the offer of cash riches has become a sure-fire way of attracting the attention of consumers.
If you’re buying furniture, go to Courts and you can enter a 1m prize draw. If you are buying Superdrug own-label products, pick up a free Beauty Spots scratchcard and win a holiday to an exotic location. Even giving to charity is now a game of chance, with the British Legion offering a 100,000 cash win for its Poppy Day appeal.
The National Lottery has changed the face of retailing and marketing in the UK in just a year. According to the Henley Centre, the Lottery has led to 12 million extra shopping trips a week, and shops with Lottery terminals have seen some sales increase by up to 20 per cent. Those without terminals have seen trade fall slightly. The UK has achieved the highest percentage of regular players of any lottery launched in the past 20 years.
Henley Centre researcher Ray Stone says: “For business the implications of lottery mania go far beyond the retail sector. The winners will be those companies which take advantage of the changes in consumer behaviour as well as the spirit of the Lottery.”
The Lottery has had a profound effect on the way products are promoted. Instant win promotions have almost doubled in the year since the Lottery was launched, according to Institute of Sales Promotion general secretary Sue Short. She says: “The instant win has spread from fmcg products to others, such as household products which have a frequency of purchase of about once a month. The number of sales promotions has probably doubled since the launch of the National Lottery.”
The instant win promotion is nothing new – national newspapers have made use of them for years. One leading newspaper managing director says: “The National Lottery has definitely changed the market, making it more difficult to promote newspaper instant win games successfully. We now have the task of reappraising that market.”
The Lottery has managed to provide a little bit of the “feelgood factor” that the economy in general has been unable to deliver. In a time of sluggish economic growth, the big prize win seems about the only get-rich-quick scheme available.
Pedigree was credited with being the first brand owner to launch a successful instant win promotion on an fmcg brand with its Car in the Can promotion in 1991. At the time there was an industry view that the long odds on such promotions could backfire and alienate the majority of customers who won nothing. But the arrival of the National Lottery has caused a significant shift in consumer behaviour, and has increased the search for instant gratification.
The sales promotion industry has been so impressed with the enticements that instant wins can offer, they are now lobbying to be allowed to give away Lottery tickets as a promotion in itself. Paul Cunningham, managing director of below-the-line agency Black Cat, says: “There have been limitations on how we can use the Lottery. We hope to see Camelot open up the use of Lottery tickets as a free give-away.”
Operator of the Lukcy (sic) Lotto scratchcards, UK Charity Lotteries, has carried out consumer research prior to its new advertising campaign that will be launched during November. One startling result from the new re-search is just how little importance consumers attach to the charitable aspects of buying scratchcards. Sales and marketing director Andrew Slamin says: “Charity is very much a secondary motivation in buying scratchcards. There is no need for consumers to be feeling charitable for them to buy a ticket.” Consumers are fixated with the idea of playing to win, and all other considerations pale in significance.
Though the National Lottery has become an established part of the British way of life in just one year, some observers say its high profile will wane, leaving it as just another product to sit alongside confectionery and other impulse purchases.
There is a view that the market has already become saturated, and not only because new players are entering it. Camelot has already launched ten different scratchcards, and the UKCL research has revealed some confusion among consumers about the high turnover of games. Added to this, new players (newish, at any rate) are trying to enter the market with UKCL, Littlewoods, Scratch ‘n’ Win and NHS Loto all vying for a slice of Camelot’s 90 per cent market share.
The rush of new players could eventually lead to fatigue. Instant wins are a craze, but many believe this will be as short-lived as the popularity of Rubic’s Cube. But the rush into Lottery-style promotions could have a negative effect on the brands that venture into them. It may be easy to sell products with the offer of a large cash prize, but when the offer finishes, sales can drop off, leaving the brand tarnished.
The other question that has vexed marketers ever since the Government announced its plans to introduce the Lottery is: where will all the money come from? The Henley Centre says lottery spending represents over half a per cent of disposable income, five per cent of savings and almost one per cent of discretionary spending.
Players tell researchers that lottery spending comes from “loose change”, the millions of pounds jingling in our pockets. Buying a ticket could mean the sacrifice of a second newspaper or bag of crisps.
But the Henley Centre says there has been a marginal increase in total sales of impulse products such as confectionery and magazines. This increase is made up of a six to eight per cent sales gain in lottery outlets as people buy while queuing and treat themselves with winnings. Over time, lottery outlets will account for a greater share of impulse product purchases.
The UKCL research has identified four types of players: flutterers; jackpot seekers; game players, who enjoy the mechanics of gambling; and specialists, who believe they can develop a system for working out the best way of beating the odds.
The last three categories are in the minority, but the effects of their switch in spending can be seen from the other gambling brands, which have all reported a switch of sales to the Lottery. Vernons and William Hill are just two examples.
Camelot’s task for coming years is to keep up interest in the Lottery. The moment it stops launching new ways of playing, consumers could lose interest rapidly. The next development will be the launch of a mid-week instants game, where players win the chance to enter a television draw through their scratchcards.
Henley Centre says that video lottery games will be the third major type of game most likely to be considered by Camelot. These would compete with the 7bn gaming machine market, and will no doubt have a similar effect on that market as the on-line game has had on other forms of gambling.
In the US, where lotteries are a mature market, the latest development, and one likely to be copied by Camelot and other lottery operators in the UK, is the KENO system. Players buy a ticket in a shop and wait for a draw to be announced on a TVscreen, which happens about every half hour. This keeps players in the shop or betting office while they wait for the result, and no doubt they spend a bit of cash while they wait. This is not considered suitable, however, for small shops and supermarkets that need a high turnover of customers.
The Lottery has brought an extra 10 million players into the gaming market. It has led to a fundamental shift in consumer behaviour in where they shop, how often, and in their discretionary spending habits.
As the Lottery is so new, it is hard for brand owners to draw definite conclusions about how best to take advantage of the changes in consumer behaviour it has brought. With new games and ways of playing the Lottery still to launch, many changes lie ahead.