How Discount Culture is Shaping the Sales Promotion Industry

Posted in Consumer Promotions and Loyalty, Consumer Promotions

Expert advice from the Institute of Promotional Marketing

We asked Carey Trevill, managing director at the IPM, to give us some insight on how discount culture is impacting the sales promotion industry - and what brands need to do to stand out. In her own words...

UNDERSTANDING ‘TRUE’ SHOPPER BEHAVIOUR

Our behaviour is of constant fascination to me, and is part of the reason that I moved from the financial world into marketing. Traditionally, above the line is all about changing attitude, while below the line is about changing behaviour – promotional marketing in its broadest sense helps us connect with consumers at the point of purchase through many different channels.

Our ability to determine our true behaviour is heavily influenced by the lifestyle and brand choices we align with, whether consciously or not. Even over the last five years, the way we shop has evolved to a point of speed and convenience and, above all, the assumptions of these factors to be present in our shopper missions is even more enhanced.

TRANSPARENT PRICING WILL CHANGE CONSUMER SHOPPING HABITS

We should anticipate the call for the transparency we want to see in pricing for services like broadband to go further into grocery and other areas. Inevitably, thinking about today’s shopper and discovering what consumers really think of your sales promotions, some habits will change and the expectation will be for this to naturally evolve.

If we take the average grocery shop, dependent on your choice of retailer, you could spend from 15 minutes to over two hours doing the shopping. Online shopping habits have also evolved as online retailers capture the online impulse purchase.

On average, you absorb perhaps six or seven words from the Point of Sale (POS) you view – and if you’re a savvy shopper you generally plan your shop and include vouchers, searching for offers. We want to be wooed as shoppers and if we don’t see the pricing at shelf, the reward is expected at point of purchase. Tesco's Brand Match Guarantee has shown us that little effort is required as a consumer to be courted by the retailers to gain loyalty from their shopper base.

THE SHIFT FROM NEED-LED TO OFFER-LED

However, your route through the direct shop in-store or online will have changed as brands vie for your attention. Why?

Because the shift to promotion has encouraged the offer-led shop rather than the need-led shop. What was felt to be a temporary boost to encourage basket spend in times of adversity has developed into a permanent behavioural shift in our shoppers, and it's not reversing.

LESS CHOICE + ATTITUDINAL ADVERTISING = NEW RULES

Tesco and others have recently taken a route to defer to core propositions of Every Day Low Price (EDLP) that don’t distract from the essential mission of the shopper.

The rise of the discounter operates on a clear and distinct basis that works for many more segments of society than we thought possible – limited choice, and defined decision-making that takes stress out of the transaction at shelf. Adding some clever attitudinal advertising to wrap up consumer perceptions has created a new playing field.

Think of the telecoms and broadband markets and how these have been leveled to create a clear line of sight for consumers, to create crystal clear offerings that everyone can make informed choices on.

BRANDS NEED TO SIMPLIFY THEIR COMMUNICATIONS

So, where is the impact for consumers, and for the brands that look to secure an engaged relationship on all potential fronts - in basket, social, advocacy and loyalty? If the retail industry wants to engage, working with the brands to create engagement past the functional to the emotional, our experience in retail has to evolve into a new space to differentiate the mission.

Our challenge is to impress and deliver our messages in succinct ways. Beware the brand engagement that is over complex, as our time poor consumer wants to get it quickly and understand why the brand wants their time. Is this a new issue, though, or an age-old challenge? Do we still need to dig deep creatively to ensure that the well-loved brands being promoted continue to be relevant and make people sit up and smile?

COURAGE AND SIMPLICITY OF THOUGHT ARE THE WAY FORWARD

Running promotions takes courage and simplicity of thought to create the measure of success you should be employing. Price will form part of the transaction, inevitably, so bridging the gap between price and promotion means the techniques that work (irrespective of channel) will bring the promotion to life.

If we are to walk upright promotionally, we must examine the triggers of the behaviour we're looking to influence. If price deep discounting dominates your category, how can you influence the use of such a product over and above the basic need state?

GET TO THE HEART OF THE CONSUMER

Creating the emotional trigger that is synonymous with your brand should ideally be experience led to build the link. This experience should take your consumer beyond price to understand that this brand, in this retail space, has just demonstrated that they understand their shopper.

How does this ideal work with the discounter-style retailer? Well, this works with the retailers full stop.

Within the industry, we may still differentiate between the big boys and the discounters, but your shoppers see retailers that are now part of their shopping repertoire rather than an experiment, and we need to treat the shopper to experiences that resonate past the basket.

WAITROSE HAS USED LOYALTY TO GET IT RIGHT – OTHERS WILL FOLLOW

There is a tipping point on the horizon where the experience we expect as consumers will lead, rather than the retailers telling our consumers how to shop – consumers will vote with smartphones and recommendations to ensure that the shape of our shop is a version of personal promotion selection in the future.

Waitrose is one brand that has twigged that, through loyalty, they can create a wholly personal experience by getting the shopper to do the work themselves – a happy value exchange. We should expect more of this.

THINK BEYOND DISCOUNT – THINK LONG TERM

Core goods have come down in price and while this encourages a greater basket spend as the price wars rage, our shopper is less likely to have shopped in one location this year, and will be using vouchers to supplement as many offers as possible. It's expected and sought at the point of purchase.

The creative brand and retailer must create a space beyond the notion of discount; the value exchange has never been more important to create a sustainable relationship with consumers.