Addicted to price cuts

Steven Round from Robert Dyas compares UK and European retailers’ use of price promotions in your Cover Story on pricing (MW 3 February, saying: “Retailers use promotional mechanics more aggressively in the UK than they do on the Continent.”

Indeed they do: but it’s not the UK retailers who, by and large, are funding these price promotions, although they are the ones benefiting from it. The ones footing the bill are almost always the brands whose products are on the shelves.

We at the Institute of Promotional Marketing are trying to educate brand owners about the true cost of an orgy of price promotions and nothing else. While such over-indulgence may drive sales in the short term, they are not necessarily profitable sales, and in the mid- to long-term they destroy brand value.

Companies should reduce their addiction to price promotions and divert some of the money to value-added promotions, which drive growth in sales, profits and brand equity.

Annie Swift
CEO
Institute of Promotional Marketing