Marketing Week’s latest marketplace piece concentrates on sales promotions which we thought was done particularly well.
Stand out promotions do not just provide a short-term sales boost but build a brand’s value - especially at a time when consumers are feeling the pinch. By MaryLou Costa
The promotions and incentives market has exploded since the recession took hold. While many industries have struggled through 2009, this sector saw a plethora of brands waving special offers around to combat any slide in consumer spending.
The rise of websites such as Moneysavingtips, Vouchercodes and Moneysupermarket means there have never been more offers available to consumers. Such sites offer a wide range of deals, from straight discounts to newsletter/loyalty scheme sign-ups, special lunch, drinks menus and, of course, two for one deals.
Offers have extended beyond food, drink, entertainment and fashion to areas as motoring repairs, services and car hire. Even health is getting in on the act, with gyms, weight loss and optical centres offering cut-price services. Dedicated bargain hunters can now base their purchasing decisions on which brands are offering promotions.
Brian Gibb, a director of promotional risk management, specialist VCG, explains: “There was a massive surge in price-based promotions in 2009, fuelled by retailers insisting that promoters focus on offers such as money-off-next-purchase coupons. Over 30% of our risk management activities were devoted to this type of promotion in 2009″.
With this kind of shopper mentality becoming the norm, the Institute of Sales Promotion (ISP) warns that businesses must not over-associate themselves with budget deals but look towards sales drivers that strengthen rather than dilute their images. Two-for-one offers should be used sparingly and any incentive should be short lived to keep consumer interest alive, it advises.
ISP chief exec Annie Swift explains: “Using continuous price promotions is not good for brands, It is difficult to re-establish the original price if it has been reduced for a long time. Price cutting can harm consumers’ perceptions of the brand.”
Price promotions do have their place, says Swift, for introducing new products, building sales at crucial times of the year and encouraging shoppers to switch brands. But marketers should think twice before resorting to this and look at promotions that deliver” added value” to the consumer. Pizza Hut marketing director Claudia Nicholls-Magielsen calls the two for one phenomenon “lazy marketing”, which buys short-term market share.
“Some of our competitors are doing that and dragging other casual dining players down with them. We can’t be blind to recession, but we need to look at how we can deliver value by setting the brand up for long-term growth”.
Swift at the ISP gives an example of a successful promotion that did not damage brand values. She says the Walkers “Brit Trip” promotion, which gave away entry to UK leisure destinations by offering points on crisp packets, delivered £5m of value to consumers and Walkers didn’t have to drop prices.
FACT FOCUS
What are promotions & incentives?
They are marketing tactics to change consumer behavious towards a brand. They are used mainly to increase sales, launch new products, boost consumer loyalty and maintain brand strength.
How are promotions and incentives carried out?
Classic forms of promotions are price offers, prize competitions, gifts with purchases and token/points collecting to redeem a reward. Promotions also include giveaways, vouchers from the brand itself or a partner brand, money-off coupons and internal channel marketing.
Redemption can differ in each case, including a straight product giveaway, providing proof of purchase to entering a code online, or texting in, depending on the target market and objective of the campaign.