CPG Promos Not Generating Lift Like Before
We know that consumers are looking for deals. They are clipping
coupons from various sources at an increasing rate. So why are retailers selling
consumer packaged goods (CPG) not getting the same sales lift they once did
from the steady stream of promotions being funded?
"We do believe there’s a level of promotion fatigue out there," Susan
Viamari, editor of SymphonyIRI’s Times and Trends, told Advertising
Age. "Promotion has been very high in the industry over the past
couple of years, even though we did see a moderation in the growth. CPG manufacturers
need to evaluate everyday pricing strategies."
The other issue, Ms. Viamari
said, is that mass promotions do not account for the individual financial challenges
that consumers face.
"Because more than a third of consumers are having trouble buying groceries,
that option of stocking up just because something is on special is not a very
easy option," she told Ad Age.
Many brand marketers and retailers
are having to reassess their promotional practices in light of diminishing
Those moving to social media and daily deal services such as Groupon
and LivingSocial may find that the hoped-for lift from these sources is not
Research by Infegy’s Social Radar found, for example, that while
consumers talked more often about great deals being offered last year, those
discussions did not translate into overall higher sales for the products being
Ad Age also reported on a survey by researchers at Rice University
that found nearly one-in-three businesses found using Groupon to be unprofitable
and that consumers became less responsive as more deals were offered.
Dholakia, a marketing professor at Rice who conducted the survey, told Ad
Age, "My theory is that as time passes there’s a little bit of jadedness
about using Groupons because then they become just like any other coupon."
Discussion Questions: Why do you think promotions of CPG products are becoming less effective? How much of the problem do you think is related to consumers’ current economic state?