Price-cutting offers are best used sparingly
I would like to correct one misunderstanding in your coverage of our recent research with the Advertising Association on consumer attitudes to promotions (MW last week). Far from defending BOGOFs (buy one get one free) and similar price-based promotions, as the piece implied, we strongly advise marketers to use them only when appropriate.
We are publishing the results of research that shows branded goods manufacturers spent £14.4bn in 2008 on pure price promotions in retailers, over half of the £25.6bn spent on all retail sales promotion. Yet the research shows that while pure price promotions can have a positive impact on short-term sales, in the long term they devalue brands and hit profits.
Price promotions can encourage consumers to try new products. But most are run by manufacturers to keep their products in the grocery multiples, not because they grow profits. They are a tax on brands. The ISP believes that, instead of relying on price promotions, marketers should focus on valueadded promotions, which are brand-building, behaviour-changing and leave consumers better-off.
At our ISP Awards 2009, the Walkers Brit Trips promotion gave £5m in savings to consumers; the Kellogg’s Zookeeper promotion delivered £3.8m in savings; and the Waterstone’s Big Book Bank offered the opportunity to get free books in return for reading and writing reviews of other books.
Annie Swift, chief executive, The Institute of Sales Promotion
