Promotions switch focus to added value

As the challenging retail climate persists and depletes market share, brands are fighting back with a battery of sales promotions, fine-tuned with customer insight.

marks
Rather than offer food at a cut price Marks and Spencer adds value by associating products with ’treat’ while at a value-for-money price level

In this age of austerity, brands are using promotional marketing to stay in touch with consumers cutting back on luxuries. For brands, the watchwords for 2011 are “adding value”.

Retailer Marks & Spencer, which won the Marketing Week Engage Award for promotional marketing this year, is using its ’Dine in for two for £10’ promotion to adjust its premium positioning in the eyes of consumers and reach out to new audiences.

By repositioning itself as a more affordable option through its dinner promotion, it hopes to add extra value for customers by offering them the convenience of an entire meal, rather than just slashing prices on multiple food items.

Meanwhile, dairy product brand Rachel’s Organic has been using an added value on-pack promotion to try to increase loyalty and frequency of purchase among the yoghurt market’s fickle, price-driven consumers, to stop them switching to cheaper substitutes. The brand has partnered with pottery specialist Emma Bridgewater to give Rachel’s Organic customers a bowl, normally retailing at £15.95, when they collect three tokens, one per promotional pack, sent in alongside a £5 cheque.

Steve Clarke, marketing director at Rachel’s Organic, says: “Emma Bridgewater kitchenware is quite expensive and highly collectible, so it was great value. Our bowls went on eBay straight away.”

He adds that the promotion fits Rachel’s Organic’s brand, which uses the positioning ’Made with Love’. Again, the brand has chosen to offer its consumers something of extra value, rather than simply cutting prices.

The Rachel’s Organic promotion also requires consumers to buy several packs. Repeat purchase can be particularly difficult to encourage in the fast-moving consumer goods market, where lots of brands are aiming to lure shoppers with price drops or buy-one-get-one-free offers.

Another FMCG brand, This Water, is using promotional marketing in its summer campaign to get consumers to try its drinks. By giving away prizes, from flip-flops to Burning Man festival tickets, with every bottle throughout the summer, it hopes to raise brand awareness and win over consumers in a competitive market.

Emma Bridgewater is a premium brand, so far from denigrating ourselves, we are borrowing some of its premium

Steve Clarke, Rachel’s Organic

Sarah Smart, marketing manager at This Water, explains: “The whole strategy was to tackle our low penetration. The question for us is ’how do we get drinks into people’s hands?’ as we believe that, once they’ve tried it and realise how great it tastes, they’ll continue to buy.”

For many brands, promotional marketing is providing the edge over competitors to get consumers to switch to or remain with their product.

Smart says: “It really helps to give consumers that extra value on an everyday, on-the-go product like This Water. For us, the main objective was to drive trial and talkability. By adding that extra value for consumers, it was giving them an extra reason to pick us up.”

Rachel’s Organic’s Clarke says this style of “added value” promotional marketing is proving useful, particularly among those companies with stretched marketing budgets. He says: “Rachel’s Organic is a small brand, relatively speaking, and we’ve got to think more laterally when it comes to driving purchase consideration. We didn’t have the budgets in 2010 to do any larger-scale advertising, so it’s about taking an idea and stretching it across as many low-cost media as possible. That’s why we did it on pack, digitally, and used the opportunity to do PR.”

Rachel’s Organic gave customers the chance to collect Emma Bridgewater kitchenware
Rachel’s Organic gave customers the chance to collect Emma Bridgewater kitchenware

This reflects a rise in the use of digital and online channels as part of a trend towards multi-channel promotions. Annie Swift, chief executive at the Institute of Promotional Marketing, explains: “There’s far more of an integrated channel approach to promotion. What that means is there’s a lot more interactivity and immediacy – it’s instant gratification.”

This Water’s Smart agrees. She adds: “The exciting bit for us is the digital part of the campaign because this is the first time we’ve done a digital push with This Water. We’re going to be running exclusive competitions alongside what we’re doing on pack, driving people to our digital platform and building communities.”

However, Swift at the IPM cautions that having many different campaign strands brings greater potential for campaigns to go astray and increasing use of online channels can present a regulatory problem for businesses. She says: “With online, it means you’ve got promotions with no boundaries; but legislation can still be an issue, because each country has its own rules. In the future there will, inevitably, be more use of online channels, including social media, but regulatory issues will need to be resolved.”

Fear of regulation does not seem to be putting brands off, however. Alongside a general rise in online campaigns, mobile marketing has come of age this year. O2 Media provides location-based mobile marketing, working with Starbucks and L’Oréal in recent months to deliver SMS and MMS to consumers in a targeted way. People receive messages, depending on their age, gender, interests and, most recently, location.

“Location-based mobile marketing is still in its infancy, but its exponential growth compared to other mechanics is quite dramatic and [it is happening] for an obvious reason – because it works,” explains Swift at the IPM.

Location-based promotional campaigns are becoming increasingly popular with retail brands, which use it to target consumers with timely offers when they are near their stores and in a mindset to make a purchase. For example, opted-in beauty-conscious O2 More customers recently found that, when they came within a geo-fenced area owned by L’Oréal, they received an SMS offering buy-one-get-one-free on L’Oréal Elvive hair care range at Superdrug.

However, in this age of price promotion and discounting, many, including Marketing Week columnist Mark Ritson – argue that too many offers can damage brand equity. Swift at the IPM responds: “There is still the issue of price discounting. I use that phrase guardedly, because it’s not price promotion, it’s discounting. Retailer pressure on brands to constantly discount price is a major challenge for brands.”

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But for brands that form prudent partnerships which suit their overall brand positioning, price promotions can provide a real boost. Smart at This Water says: “Because our penetration is so low and because as a brand we are still relatively young, the fact that we’re getting our drinks out to many more people is only going to further drive our brand measures. We are building brand equity with this campaign.”

Clarke at Rachel’s Organic adds: “Emma Bridgewater is a premium brand. So, far from denigrating ourselves, we are borrowing some of its premium. We don’t end up promoting deeply often in a promotionally aggressive category. Our big pot yoghurts sell for £1.59 and, typically, what you see is a multibuy deal that is two for £3. That’s a saving of 18p. We’re not giving it away and we feel that adding this value on top is a perfect recipe to drive frequency.”

Next year looks likely to provide many opportunities for brands to test value-added marketing promotions. Major events such as the London Olympics, UEFA’s European Football Championship and the Queen’s Diamond Jubilee can all be leveraged by clever brands.

This ties in with the current rise in the use of experiential techniques, which tend to focus on changing buyer behaviour. The IPM’s Swift says: “We’ll probably see quite a lot of experiential marketing surrounding the Olympics. People will not immediately go and buy, but it will warm them up for a possible brand switch.”

However, despite the exciting opportunities available, Swift advises brands to leverage these events with caution, especially when it comes to the Olympics. She warns: “The Olympic organising committee is very concerned about ambush marketing. London 2012 is ferociously protective of sponsors’ rights. But there are ways that promoters can use the Olympics, as long as they stay within the guidelines.”

shaun

Viewpoint

Shaun Gregory
Managing Director
O2 Media

At the moment we are seeing a shift on the part of brands towards greater acceptance and adoption of mobile marketing and location-based campaigns across all areas.

The majority of our own campaigns are now location-based. New technology has unravelled lots of opportunities, not just in mobile marketing, but also across platforms such as Facebook.

We did our first location-based campaign towards the end of last year with Starbucks across all its coffee shops in the UK. It was triggered by location.

When the customer walked into the radius of each Starbucks coffee shop, they would receive the offer of 50p off a coffee. There was a high redemption rate and, compared with other mainstream forms of media, it was more effective.

There are new formats, too. The Starbucks campaign, for instance, used picture messaging, rather than straight SMS. Consumers can also redeem their offers in a number of ways. They can receive a straightforward SMS and take that into a store, or they can redeem
coupons and vouchers in store.

FMCG companies and retailers are starting to make a move into this space.

We’re now talking to brands such as Unilever, Tesco, Debenhams and Topshop. The current economic austerity is driving a lot of these models. It has brought the consumer a new age of offers, delivered by the likes of [coupon business] Groupon or Google.

One of our services, O2 More, is about connecting customers to all the offers and opportunities that matter to them. The response rates are strong, because everything is personalised and built on good data and targeting. We go to great lengths to reach the right customers with the right message.

One form of marketing that cuts through nowadays is personalisation. Leveraging that opportunity from customer data isn’t about creating spam; it’s about providing a truly relevant customer experience.

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Q&A brand in the spotlight

Lucy Calver
Group head of marketing
(food and CSR)
Marks & Spencer

MW: How did the ’Dine in for Two for £10’ sales promotion help you?
LC:
Because we are well known for our food, and because we knew from our research that customers were cutting back on eating out, the promotion allowed us to reinforce our quality credentials at the same time as giving customers a great value deal.

MW:What is the benefit to a brand such as M&S positioning itself as affordable?
LC:
It is important we keep ourselves relevant to our customers’ lives by showing that we understand that times are tough. We have to respond with activity that gives them opportunities to keep being able to treat themselves with affordable, quality food.

MW:Why not introduce a value range?
LC:
Customers are used to supermarket value ranges and have always said they would not want, nor expect, M&S to lower our standards. They tell us they are amazed at the generosity of the deal, with M&S giving them more than expected. It gives customers choice in creating their own meal and is seen to capture the pleasure of M&S food.

MW: Do you think too many sales promotions can damage a brand’s equity?
LC:
It depends on the brand. For us, it is important we do the right promotions, rather than copy the competition. Customers say they like it when we vary our promotions, as it allows them to try new things.

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