By Paul Godwin
Similarly, while 85% of consumers are tempted by buy-one-get-one-free offers, less than half of marketers – just 42% – appear to believe that type of promotion to be worthwhile. Why is there such a disparity in what consumers want and what marketers believe that they do?
Consumers over the past few years have become so much smarter when it comes to seeking out value-added deals – whether that be in the form of price-led promotions, money-off coupons or vouchers. In fact research would suggest that 9% of shoppers may now be tripling the amount they spend on promotional offers.
Interestingly though, despite some 71% saying they want to engage with promotions, far fewer in the past 12 months have actually done so. According to fast.MAP’s research, in the past year around 58% of consumers have tapped into reward or loyalty schemes, such as those offered by supermarkets, newspapers and retail outlets like McDonalds. Some 48% have redeemed some sort of price discount and 43% say they have printed and redeemed a voucher or coupon from the Internet. Forty percent have interacted positively with sampling, or cashed in an on-pack coupon. But after that, consumer interaction rates with promotional offers drops below the 40% marker – meaning that while 71% may say they are receptive to promotional marketing tactics, only half or less are actually engaging in promotional activity.
The evidence from the fast.MAP research suggests that those marketers who dismiss promotional tactics as part of their armoury really are missing a trick. For example nearly 30% of consumers say they have engaged in prize promotions in the past year. This is an impressive figure, and one that surely more brands could capitalise on. What’s more, consumers also say they’d switch brands, if the brand in question delivered a relevant and engaging prize promotion – 41% said they would do so. So come on marketers, consumers need to be shown the promotions – support them with advertising and point of sale materials as well as digital support, and the rewards are there to be reaped.
Marketers need to focus more on the context of what attracts customers to promotional techniques. It’s hard to pinpoint precisely which promotions are most popular with consumers – the detail at the end of the day depends on the product and the target demographic. But what the fast.MAP survey unequivocally suggests is that consumers want to be able to take brands up on such offers.
So why do only 38% of marketers feel promotional marketing tactics are worthwhile? Is it that too many are too polarised in their thinking when it comes to opinions over whether promotional marketing really works?
Marketers, more than almost anyone else in the managerial chain, have to justify to the board that their every action creates a return on investment – therefore a department that has tried couponing or vouchers before without the desired effect may be inclined to instantly dismiss them as a waste of time. Yet we know that in these cash-strapped times, consumers are filling more of their shopping baskets with purchases plucked from the shelf because of the discount attached to them, over the brand name itself. In 2012, 6% of consumers said that up to 30% of their shopping basket was prompted by some kind of promotion, such as an on-pack offer or loyalty scheme. In 2013 this figure has doubled to 13%.
There is plenty of research to back up the attitudes of a nation when it comes to reacting to promotional offers. For example, only this month coupon and voucher services provider Valassis suggested that consumer use of Money Off Next Purchase (MONP) coupon redemption is accelerating, suggesting that the total amount shoppers save could top £2 billion this year. By its estimates, 275 million coupons with a value of £850 million were cashed in at checkouts in the first half of this year – if growth in the second half continues at the same rate that figure could total more than £2 billion for the full year.
There is no reason why when used effectively, promotional offers can’t deliver a higher or equal ROI than most forms of advertising. In this continued economically turbulent climate, shoppers continue to be considered in their spending, adopting techniques to make their money go further. Surely then the implications for retailers and brands are that they need to be able to reflect the fact that shoppers are looking to get the most out of their money, and they must demonstrate value beyond lowest price in the form of attractive promotions and money-off deals.
The fast.MAP survey polled 1,072 consumers and 308 marketers across a breadth of disciplines and those are pretty substantial sample sizes, so we can safely consider the results to hold credible weight. Perhaps now then is the time that the 62% of marketers who don’t believe that consumers are particularly influenced by promotional deals need to have a re-think.
About the author
Paul Godwin is IPM Insights consultant.