Sales promotion: Not the ultimate El Dorado for brands

Here are some interesting tidbits.

n Brands that offer discounts/extras are perceived to be of lesser value by consumers than brands that offer complementary freebies.

n It is the SEC A2 consumer who avails of promos more frequently than the SEC B, as is believed popularly.

n Advertising alone cannot push a promotion; retail presence in terms of POPs and retailer push is equally critical.

n Though promos are working to some extent to expand customer base, a lot of it is going towards feeding the existing loyalty of the customer.

These are some of the findings of a recent study by Triton Planning Team and Market Pulse to gauge the impact of promotions on consumer (both women and men) buying behaviour. These findings show that promotions have to be used judiciously to be of use to marketers.

The joint study titled ‘Not the ultimate El Dorado for brands' has been divided into two parts on the basis of the attitude of women and men towards special offers and discounts. While the first examines the impact of promotions on 140 women who had bought an FMCG with a promo offer, the second part records the impact of promos on 100 men who had bought at least a mobile pre-paid card or white goods/two-wheeler or a shaving system. The topline findings of the study dispel some conditioned myths and reinforce a few known idioms.

About 12-14 per cent of the women who had bought an FMCG brand on a promo said they would have bought the brand anyway - with or without offer. Another 6 per cent said they would abandon their brand in the absence of an offer. About 12 per cent confessed to have switched brands because of an offer. The women respondents also said they came to know about promos on products such as tea and atta brands at the retail point (shops), whereas for soaps and chyawanprash the source of information was television.

The second part of the study has more such insights.

About 14 per cent of the men who bought a shaving cream brand with a promo offer said they had switched their brand because of the promo. The balance 86 per cent said they would have purchased the brand anyway, proving brand loyalty among men was higher or may be the lure of promos among them was lower.

In the case of the pre-paid mobile cards, promotional reach was shown to be a decent 33 per cent, with about 37 per cent of the respondents having switched brands because of a promo offer. In the case of white goods/two-wheelers, the promotional reach was 33 per cent, and brand switch was to the tune of 43 per cent. A whopping 57 per cent said they would have purchased their brand any way - with or without offer.

The study inferred that consumer promotions play a positive role in advancing purchases in categories such as white goods and mobile pre-paid cards. Interestingly, consumers who availed of promo offers were found to be more family-centric than the ones who were willing to give offers a go by.

A key question addressed by the study is, does the benefit accruing from consumer promotions justify the huge spends made by companies on promo offers? Apparently, the size of that group of consumers who have made a purchase decision or switched brands on the basis of a promo was quite small compared with the effort and money invested by the company. As the paper concludes, care should be taken to ensure that "consumers do not get loyal to the rebate coupons and discounts instead of the brand." It says, "Maybe, we need to retrace those days when long-term brand building mechanisms and strategies were given their due share and promotion remained a strong devise for short-term gains." © 2003 agencyfaqs!