Market Summary - Sales Promotion Marketing

Media Update:

Sales Promotion Marketing

Date:

QTR 2 2012

Sponsor:

SMP

At a Glance

Sales Promotion marketing is about adding value not cutting price. Anyone can do that!

Sales Promotions Last year, in the UK alone, the sales promotion industry was worth more than £7,000,000,000 - a billion pounds more than was spent on advertising.

Institute of Sales Promotion (ISP) research shows that £14.04bn was wasted on price promotions in 2009, with 90% of the cost being fronted by suppliers not retailers.

And we can expect the percentage of product sold on deal to continue to increase with around 40% of the total grocer market being sold on a deal.

“Supermarkets are causing “collateral damage” to brands with inefficient price promotions”.

According to a report published by the IPA it’s not just Grocery Supermarkets, its virtually all retailers, whether online or offline.
Brands are allowing their equity to be eroded, commoditising everything they have built and undermining everything a brand should be.

“Product marketing chiefs must "stand up" to retailers over price promotions to prevent long-term damage to their brands” the Institute of Practitioners in Advertising (IPA) has warned.

But that’s a very risky strategy. Tactical price promotions will always have a place at the table in any brands make-up. The problem is that they have become part of the brand strategy, often unintentionally and not by choice!

So are there alternatives?

If we can prove that replacing just one or two price promotions with added value promotions can deliver incremental volume, increase brand loyalty and most importantly, increase margin for all parties, then making Sales Promotion marketing an essential part of your Brand plan is critical.

But can it be done?

Click here to see an award winning case history of one of the most successful promotions ever run by a top ten grocery brand in the UK’s No 1 grocery retailer

Case Study:

www.getmemedia.com/ideas/CompOpps.aspx?id=755

Email Contact:

simon.mahoney@smp.uk.com

Website:

http://www.smp.uk.com/

Hot Topics

Bogoff BOGOFs!

Supermarkets are facing pressure to help consumers cut down on food waste amid claims that 6.7million tons is thrown away each year, at an average cost of £420 per household.

Environment Secretary Hilary Benn has criticised the promotions, known as BOGOFs, saying “they fuel the huge food waste mountain”.

A government study has even suggested the deals could be outlawed “if supermarkets do not help shoppers consume less”.

Historically governments have not considered the wider implications when changing laws and it is highly likely we will follow the German route where ALL BOGOFs are illegal.

Brands must now look at alternative ways to sell more product (rather than give it away) across all sectors, all media and regardless of channel.

And as environmental and social issues become more important, consumers are moving away from excessive consumption and buying brands that make a positive social contribution. The recent Pampers UNICEF promotion (part of a strategic alliance) offered one vaccine against newborn tetanus in the developing world when consumers bought one pack of Pampers.

This simple, relevant and highly emotional promotion outperformed Pampers’ leading competitors BOGOF promotion.

In contrast to the short term hit of price, added value offering reward for the consumer or a cause that they can relate to, builds brand equity, increases sales and creates long term loyalty.

What is it?

“Advertising takes the horse to water Sales Promotion makes it drink”

Sales Promotion is not about free product or money off. It’s about adding value to instigate a change in consumer behaviour, either in the short or long-term motivating and incentivising consumers to choose one brand or service over another.

The new empowered multi-channel consumer is creating the perfect opportunity for ALL brands to re-engage with their consumers by adding value.

Sales Promotion - what can it do and what can’t it do?

By the very nature of changing a consumer’s buying behaviour it can do an awful lot!

•   It can instigate trial

•   Prompt repeat purchase and brand loyalty

•   Prompt multiple purchase

SMP have compiled a list of Sales Promotion mechanics available and a list of Techniques versus Objectives. This highlights a brand's key objective(s) and the promotion mechanic(s) to realise it. Please see attachment.

Like any element of the mix, Sales Promotion is most successful when it’s part of an integrated campaign. Traditional above the line (ATL) media support ensures awareness of the promotion whilst local-to-store and/ or in-store activation ensures consumer recall and prompts a purchase.

Big brands tend to use ATL media to support added value promotions to great effect.

Whilst many brands cannot afford ATL advertising there are many other mediums available to deliver the promotional message to a wide audience including:

Experiential
Promotional Radio
Door Drops
Instore (PoS)
Online

Download Associated Attachment

How does it work?

It works best when it’s an integral part of an overall brand strategy. Consider Walkers Crisps, Tesco Club card, Virgin Flying Club, Andrex on-packs, Kia cars warranty, JLP 5 year TV guarantee. All use SP techniques to add consumer value.

So Sales Promotion can manifest itself in many ways.

But consider this:

“If I you can take a promotion off one brand and put it on another without changing anything then don’t bother”

Dave Glik. Ex marketing director of Coca Cola, Nestle, Kimberly-Clark and now Marketing Director of Australia’s biggest dairy producer

Key Features and Benefits

Sales Promotion is measurable and offer brands opportunities to increase sales. Over the past 20 or so years many of the ISP Grand Prix Winners have been campaigns that cost under £50,000.

It works best when based on consumer insights, brand relevance and, of course, when integrated with other elements of the mix.

Without doubt the more consumers are exposed to a promotion the better the results.

Sales Promotion can help brands join up all the access areas or touch points along the consumer journey. This includes in-store, at the point of purchase, on the web, via social networking, direct marketing and of course the new kid on the block Experiential.

Key Audience Strengths

Sales Promotion prompts consumers to interact with brands regardless of sector. And as virtually all consumers actively participate in a promotion of some sort every day and prices are almost as low as they can go ALL consumers will now look for a point of difference other than price. That’s where Sales Promotion delivers.

And it doesn’t matter who you are, where you live, your age or gender Sales Promotion engages your brand with existing and potential consumers

Finding Out More

SMP are an independent agency with offices in London, Tunbridge Wells and a network of affiliate, like-minded independent agencies across EMEA and the Americas.

The agency specialises in four distinct areas:

Sales Promotion
Experiential Marketing
Direct Marketing
Channel Marketing

We have won more awards than any other agency in Europe (over 125) and believe passionately in brands.

Our clients include;

3M
Alliance healthcare
Akzo Nobel
Bausch & Lomb
Dell
Kimberly-Clark
Microsoft
P&G
SanDisk
The CoI
WD40

For more information about the agency, our people, work and awards please visit www.smp.uk.com
Contact Simon Mahoney, Business Development Director on 01892 548 282

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