A ton of evidence exists to prove that sales promotion works as a way of improving volume and value sales of a brand. So it makes sense to conclude that manufacturers could double that improvement by running cross-promotions between different brands from the same stable.
Yet this rarely happens. Why are companies so reluctant to engage in such a nice little earner?
Many in the marketing services industry lay the blame at the feet of brand managers, saying they are too parochial and too competitive to keep an open mind about deals with other brands, whether inside or outside their brand’s stable.
“Cross-promotions with sister brands from within the same organisation sound like a good idea,” says William Anderson, business director of sales promotion consultancy Poise Marketing.
“They should be quicker and easier to pull together than going outside. But left to their own devices, brand managers will always be too busy to commit time to internal negotiations.”
Chris Killingbeck, chairman of customer management specialist Manifesto, agrees. “An inherent problem with cross-promotions is that brand managers are brand focused and thus primarily concerned with implementing their individual brand strategies and not that of other products within the parent stable,” he says. “They are programmed – they don’t want to do a deal with the office next door.”
However, it may not be the fault of the brand managers but of the way the client company is structured.
Tequila Payne Stracey chief executive Jane Asscher believes it has a lot to do with the organisational structures in which brands exist, and says that none of her current clients are running promotions between sister brands.
“The structures are not set up from a customer perspective but from a brand perspective. Brand teams are structured vertically rather than horizontally and there isn’t necessarily much interaction. There is an inability to see and realise opportunities.”
Another problem is that brand managers tend to sprint up the promotion ladder, often moving on from a position within a year or two of starting.
Anderson says: “It is one of my biggest concerns. Recent research said that 29 per cent of people at marketing director level move on within a year. This makes for almost 100 per cent turnover in three years. At brand manager level, people move even more rapidly.”
Andrew Kingham, client services director of The Marketing Store, which runs promotions for Walkers Snacks, says: “I don’t think I’ve ever worked for a client that has had stability. You have to go through the learning curve with new people on the client side. In my five years of working on Walkers, there were two marketing directors and several brand managers. They have changed far more often than we have.
“It’s even worse in international companies,” he adds. “People are forever moving about between offices in different countries.”
New brooms in the brand management function may be tempted to sweep clean, keen to make an impact before they move on to the next job, but they should also consider the long-term aspects of the promotional plans they dream up.
Asscher says: “Brand managers may only stay for a short time and so may see their activities as short term, but brand values will subsist for a long time. The work that brand managers are doing, even if it is tactical, should always be balanced with the long-term health of the brand.”
In the face of this rapid turnover among client companies’ staff, it is often the sales promotion agencies that are in the best position to take the long view and carve a role for themselves as custodians of the brand’s values and positioning.
So it seems to be up to the agencies to encourage brand managers to think beyond the tactical quick-fix and to consider partnerships with other products. Indeed, one of the major roles of agencies is to broker deals between brand owners and complementary products that can be used as premiums or partners. But this still doesn’t explain why they so rarely look internally for those partners.
Anderson at Poise believes that once again it may have something to do with brand managers. “Brand managers are more competitive with one another if they are not colleagues,” he says. “As a result, the deal that can be struck with outsiders is often far more valuable to their brand.”
Others in the industry suggest that it has more to do with the nature of the brands themselves, saying it may be a mistake to assume that partners can be found from within a portfolio. Just because products are fairly similar does not mean they will go well together: people don’t tend to buy both bitter and lager, for example, though they might be tempted to combine beer with a snack product.
A biscuit manufacturer might not want to cross-promote for fear of cannibalising its other products, though it might find a tie-up with a tea brand more profitable.
There are many aspects of a brand that need to be compatible for a joint promotion to work, says Asscher. “Who to choose as a partner must be based on the brand’s relationship with customers,” she says. “There has to be a synergy of brand values, positioning, scale and customers.”
Distribution can also be a problem: for instance a retailer may stock one of the products in a proposed partnership but not the other.
“Sometimes a brand can’t get what it wants internally,” agrees Anderson, adding that a deal with an outside partner can offer “the opportunity to talk to a completely new market or go through a completely different channel”.
Poise Marketing, for example, has negotiated a deal between Bodyform FemPro and Mizz magazine.
“Bodyform used to produce a nasty pamphlet about puberty,” says Anderson. But the tie-up with the teen magazine means the content is written in language which is more appealing to teenage girls and places Mizz in the education market, so there are benefits for both brands.
In such totally different markets as these, there is no danger of cannibalisation – but it can be a big risk in other markets, believes The Marketing Store’s Kingham.
“If three brands from a stable promote together and a fourth doesn’t, then that one is likely to suffer,” he says. “And if sales dip on that brand, then the trade will start to ask itself if it is worthwhile continuing to stock that product.”
Kingham points to another problem: “If three or four brands do a promotion at the same time, you may struggle to get prominence for any one. Consumers get confused too.
“If you run a single promotion, you are clearly seeking to take share from the competition, but if you do several, you may start to steal share from your other brands.”
There are financial advantages from working with an external partner, too: you have the benefit of the sales forces being able to mount a two-pronged attack on retailers, and the costs of the promotion are split between you. The profits from the promotion are split, however, which adds to the argument for keeping things in the family.
Some companies are in a better position to mount internal cross-promotions than others – those with a broad product portfolio have more options than most.
Asscher cites Unilever as being particularly good at running cross-promotions between Lever BrothersÃÂ household cleaners and its e-commerce home cleaning service. She adds that the company also runs successful cross-promotions between food products.
DIY products, too, are good at making use of available opportunities. Black & Decker, for example, runs promotions which offer customers the chance to “buy one tool and get another at a discount”. There are fewer dangers of cannibalisation here. If customers go into a hardware store needing a drill, they are highly unlikely to buy a sander instead, though they may buy one as well, persuaded that it will be useful at some point in their decorating life.
But other companies are not so good at capitalising on synergy between brands.
“As a consumer,” says Asscher, “I don’t think Virgin uses cross-promotion as much as it should. There must be great opportunities for the planes, trains and phones, even the cola, to hook up – especially given the standing of the name in consumers’ minds.”
Killingbeck cites Kraft as a company that is missing opportunities: “It’s got coffee, Toblerone chocolate, Dairylea – it could be making more use of joint promotions in those areas.”
Marketers who fail to talk to the people next door may be missing a trick.
Perhaps they could learn a lesson from one of the savviest sectors in the industry – retailers. Companies such as Tesco and Boots have been fast to catch on to the benefits of encouraging customers to buy items which are not normally in their shopping basket, by offering them more products, perks or points for doing so.