Promo junkies become hooked on a quick fix

The retail sector’s aggressive use of price-led offers poses a long-term threat to brand values as consumers take advantage of a tool designed to give sales a quick uplift.

brand in the spotlight

Q&A For Goodness Shakes!

Alex Brooks marketing controller

What is your definition of a sales promotion?
Done well, a sales promotion should take a consumer on a journey. From trial to repeat, then to frequency of purchase, increased weight of purchase and finally, the Holy Grail, loyalty.

Can price cuts achieve loyalty?
Not at all. In the recent economic climate, brands are tactically employing sales promotions to make sure they hit, or at least prop up, their ailing numbers. As such, we’re in a world that creates promo junkies, and they’ll brand hop to get their fix.

What are retailers and brands doing about this?
Retailers and brands say they want to be less promotionally reliant, but it’s all talk. No one wants to make the first move. It also makes life difficult for new brands if they’re trying to get a foothold in a category that has big brands reliant on promotions.
Is there a way out of this pattern?

You won’t get the promo junkies going cold turkey, so a solution may be to move to gradual withdrawal, or reduce the big promotional mechanics. You could offer more value-added promotions such as extra value packs, loyalty schemes or competitions.

What are you doing in particular?
We are focusing on brand building activity with carefully selected partners. Our current promotion offers the chance of winning one of 100 bikes worth £1,200 from online bike retailer Wiggle. It’s part of a £5m giveaway, all focused on sports kit.

Is it working?
Last year’s competition involved customers entering a draw to win one of 5,000 pairs of Mizuno trainers, which generated a sales uplift of 22%.

in practice top tips you need to know

  • Promotional diet: If you run the same sales promotion for too long, you get customer fatigue. Everything in moderation.
  • Know your limits: The safest promotions are price promotions and straightforward prize draws. The riskiest promotions are those where there is a direct cost associated with each redemption. Brands should have adequate insurance and never make assumptions about the consumer response. It requires extensive research and one of the best ways of mitigating financial risk is to use a promotional risk insurer to check how financially risky a promotion might be.
  • Check your supplier: The biggest risk any brand takes is in its choice of supplier. Carry out due diligence of a supplier’s credentials.
  • Get online: The number of sites where people share information on deals is rising. Monitoring these sites can offer insight into consumers’ views about certain promotions.
  • Connect: Contextualising price can help avoid devaluing the brand. Showing you understand the price constraints of consumers, and reframing prices for a limited time, means brands, rather than retailers, take the lead.

top trends 2010/11 predictions

Hamish Renton, Marketing director, Milk Link

It’s all gone a bit mad in the cheese industry. In the past year, 65% of branded cheddar was sold on promotion – up from 59% the year before.

How can you build a brand when 80% is sold on discount? What happens next will depend on the economy. If there’s a recovery then there will be a reduction in deals. If it’s slower, the current dynamics will remain.

Sean Galligan, Marketing director, Dwell

Everybody is using price promotions, so the barrier is rising. A 10% discount isn’t enough these days. We do sales promotions based on price, but I think the sector generally can get cleverer with its sales promotions. Shopping is a hobby nowadays, so we need to excite consumers.

Simon Marshall, European marketing director, The Marketing Store

Consumers are now much more concerned with getting value for money. This doesn’t necessarily mean the lowest price, but it does mean that shoppers are considering their purchases more carefully. John Lewis has profited during the recession not by piling it high and selling it cheap, but through delivering great service and quality at a fair price.

Matt Groom, Account director, Pi Global

The internet has radically increased the options for promotions. But the downside is this represents more chances to foul up the relationship your brand has with the consumer. Successful integration of multiple formats should tie the consumer in to the brand on more levels.

Gemma Lovelock, UK managing director, TLC Marketing Worldwide

The atmosphere of sharing during the festive season alongside heightened shopper needs provides perfect placement for well thought out sales promotions. The “a gift for you and a gift for me” mentality will help drive the attraction behind sales promotions.

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