What does it take to produce promos that pop?

Discussion
Photo: @Vruln via Twenty20
Apr 11, 2019
Denise Leathers

Through a special arrangement, presented here for discussion is an excerpt of a current article from Frozen & Refrigerated Buyer magazine.

Trade promotion drives traffic and remains the go-to lever for short-term sales increases for grocers. But research shows promos have become less effective at driving lift as consumers have become accustomed to buying on discount and expecting ever-bigger deals.

Many shoppers also don’t have time to shop multiple grocers for deals and head straight to their nearby hard discounter or club store for everyday low prices. Other factors being attributed to promo weakness include shopper visits increasingly geared towards more immediate consumption at the expense of bulk deals (i.e., “10-for-$10”) and less shopping taking place at the center store where many promoted items are shelved.

Industry experts believe retailers need to elevate their promotional game and be more creative.

“It’s not a one-size-fits-all proposition,” said Bob Shaw, founding partner of Concentric Marketing.

Colin Stewart, SVP of business intelligence at Acosta, said, “The strategy should include [a determination of] which categories and brands will drive traffic into the store, which categories and brands will drive shopper loyalty and which categories and brands will drive larger shopping baskets.” Fortunately, he adds, retailers have a variety of new predictive tools at their disposal to help inform their strategies and make decisions around promo timing and price points.

Targeted, customized offers should be a big part of any strategy to help support trial, purchase frequency or re-engagement, experts agree. Joan Driggs, VP of content and thought leadership at IRI, stated “[Shoppers are] looking for more relevant discounts and communication.”

The best promotions will actually combine traditional storewide promotions with personalized digital overlays, believes Jim Hertel, SVP at Inmar Analytics. He said, “We think targeted digital promotions that hit really price-sensitive consumers work very well when they’re integrated with more moderately discounted in-store promotions.”

Another strategy popular with the experts is cross-promoting with complementary products.

Still, it’s not uncommon for a grocer to repeat last year’s plan. Heavy discounting has also become the default response to sluggish sales because, quite simply, it’s easy. “While ROI might never be there or you end up rewarding customers who would be buying anyway, it still creates the most direct, provable lift,” said Mr. Shaw.

DISCUSSION QUESTIONS: Do grocers need to wean themselves off discounts as the main pillar of their promotional strategy? What suggestions would you add to those in the article for maximizing trade promotion efforts?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Execution of promotion communication can be the difference between it being effective and not working at all."
"Whatever the type or scale of a promotion, one of the most important factors is getting the product to the store in time for the promotion to start and keeping it in stock..."
"Certainly when a store is littered with sale tags on hundreds of items every week the impact of each of these deals is diminished over time."

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11 Comments on "What does it take to produce promos that pop?"


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Dr. Stephen Needel
BrainTrust

Of course grocers need to wean themselves from promotions. But many only have that as a reason to shop there. Give us better reasons to shop at your store and we will go there. Not many do.

Joan Treistman
BrainTrust

Promotional strategies, discounts included, are often more complex than marketers anticipate. We know that consumers don’t necessarily see offers the same way their creators intended.
Promotions to bring shoppers into the store vs. in-store (once you get to the shelf) promotions generate different levels of enthusiasm and responses. The article suggests that this context or consumer perspective is not necessarily part of the development process.

Getting shoppers to spend more in the store (once they are in the in the store) often relies on signage to communicate the offer and, of course, assumes the actual offer is relevant and perceived as a good value. Promotional signage can be “invisible” to consumers who focus on what they bought before so they can get out of the store quickly.

Bottom line, execution of promotion communication can be the difference between it being effective and not working at all. The actual discount or other offer conveyed poorly has lost its opportunity to succeed.

Mark Heckman
BrainTrust
Certainly when a store is littered with sale tags on hundreds of items every week the impact of each of these deals is diminished over time. Those chains that practice hi-lo promotion and pricing are more likely to see improved lift from their efforts if they have fewer, but deeper discounts and as Jim Hertel suggests, couple those promotions with more targeted, digital overlays. Coming from the supermarket channel, my experience is that there are actually very few, highly repeated items that comprise the list of “key features” or front page items. The other discounted items are pass-throughs from manufacturers who are looking for more volume. Simply reprising these promotions year after year will undoubtedly produce diminished impact given that most competitors are pushing the same items. I call this promotion inertia. As long as everyday pricing is competitive, reducing the amount of deal tags your store personnel must change each week in favor of fewer, but better deals along with more targeted digital discounts is at least one strategy to lower store labor costs… Read more »
Dave Bruno
BrainTrust

Smarter promotions, not fewer promotions, is likely the key to long-term success in grocery. Detailed customer analytics are readily available, as rewards cards have already done the heavy lifting: shoppers are entirely comfortable scanning their cards before every purchase. Even cash purchases can be tracked and analyzed – an analytics luxury few other categories share. Unfortunately, shotgun promotions take very little advantage of this rich data and do more harm than good to the long-term health of the business. Assortments that reflect the unique nuance of each locality, combined with personalized offers based upon very personal history (that encourage shoppers to expand their food cultures) are the key to long-term health.

Ryan Mathews
BrainTrust
Funny thing … after, quite literally, 101 years of advertising that the most important element of a transaction is heavy promotion, crazy discounting, and price wars, customers get it — they want the best deal available, as long as they still perceive it as fair and honest. What does it take to move away from this? All the things too many grocers have either forgotten or never learned — inventory discipline, creative product curation, in-store storytelling, meaningful customer service and, above all, understanding how to make a profit without relying on trade promotional dollars. Supermarketing is a commercial version of what William Burroughs once described as “the algebra of need.” Margins are bad, so grocers pursue trade dollars with manufacturers only too happy to spend to buy shelf space for products and line extensions for which there is no genuine consumer demand. The result? Shelves get backed with unneeded and unwanted product, consumers are turned off and heavy discounting becomes the only option. Want to break this vicious cycle? Learn what customers really want; sell… Read more »
Doug Garnett
BrainTrust

Retail suffers from living in a bifurcated world — torn between “promotion” and “brand.” But there are far more options. Retailers only rarely discover that one of those options is product. When well communicated product brings new and returning shoppers into stores at very high rates and drives high profitability — without caving to lower price or brand destructive practices.

Retailers need to develop more imagination around product. And need to remember what Sergio Zyman observed, that price is motivating only when there’s nothing more motivating — like the product. Today’s promotions disease comes because retailers have ceased to believe they offer anything else of value.

Ricardo Belmar
BrainTrust
Retailers in general, and grocers in particular, should realize that competing on price alone is the last resort option and only results in a race to the bottom. The fast track even lower margins, at the expense of short-term volume gains. For grocers, they should re-think their promotions in the context of the store layout as well. The time-honored tradition of perimeter vs center-store grocery has become outdated and must change to grow their customer base. Convenience (i.e. the time factor) conquers all. That old-style layout is not conducive to a convenient, e.g. fast, trip to the grocery store that so many shoppers now crave. Promotions should be leveraged to encourage customers to try new products, or related, complementary products, not just to drive basic foot traffic. There must be a brand value beyond a low price. Grocers could stand to learn from department stores here — they have been the masters of constant, nearly permanent discounts, that have only served to train shoppers to never pay what they perceive as full price. They know… Read more »
Andrew Blatherwick
BrainTrust

Whatever the type or scale of a promotion, one of the most important factors is getting the product to the store in time for the promotion to start and keeping it in stock during the promotion. Nothing annoys customers more than going to a store for a promoted item and not being able to buy it. It’s not only a waste of resources, it also lowers credibility for your brand and drives customers away, which is the counter reaction to why you promoted in the first place.

Yet how often does this happen? Lots! Marketing departments create the promotion, buyers negotiate the promotion and then the communication goes out of the window and the product is either late or out of stock on the first day. Getting the timing, forecasting and supply chain right is key to a successful promotion strategy, whatever that strategy be.

Ralph Jacobson
BrainTrust

Great suggestions in the article. The challenge with the grocery biz is that we’ve been discounting since day one. Others have tried to wean their customers off of it with little success. That doesn’t mean you shouldn’t revisit the idea, along with today’s most innovative promo tactics that are showing positive, measurable results.

Ken Morris
BrainTrust
Ken Morris
Retail industry thought leader
7 months 1 hour ago

Consumers want low prices and deals, but they want them to be convenient. People don’t have time to clip coupons (physically or digitally) and they won’t change where they shop based on a special discount or deal at a store that isn’t in their shopping routine. Retailers need to make the discounts automatic based on a customer’s loyalty program participation or spending status achieved.

Buy one, get one free (BOGO) offers work if it is something that the customer needs, but digital signage and coupons for products or brands the customer doesn’t want aren’t enough to stimulate a change in product selection.

Frictionless Promo is the way to go, like Amazon Prime at Whole Foods.

Paco Underhill
BrainTrust

Price promotions are like heroin — the more you use them the less effective they become. There are other, better ways to price and feature produce. Wasteless.com the Netherlands based company has dynamic signage that lets produce be discounted based on an expiration date. Japanese supermarkets show pictures of the farmer and the field where something is grown.

wpDiscuz
Braintrust
"Execution of promotion communication can be the difference between it being effective and not working at all."
"Whatever the type or scale of a promotion, one of the most important factors is getting the product to the store in time for the promotion to start and keeping it in stock..."
"Certainly when a store is littered with sale tags on hundreds of items every week the impact of each of these deals is diminished over time."

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