Research highlights irrelevant price promotions

Research by GI Insight has found that as retailers seek to keep their customers during the recession there has been a major upswing in price promotions, but many are irrelevant to the recipient.

The survey found that 57 per cent of UK consumers have noticed a significant increase in the price promotions and special offers they are receiving through direct marketing.

However, 68 per cent said the vast majority of these offers are totally irrelevant to them.

In other words, more than two-thirds of the effort, creativity and budget being devoted to special-offer campaigns are being utterly wasted, because it is incentivising purchases that the recipient will never make.

In the mid of the one of the deepest recessions of recent decades, consumers are becoming far more price conscious.

Some 35 per cent of consumers said that, in the last year, they have switched downmarket to a 'value' supermarket for a significant portion of their food shopping.

The equivalent proportion among clothes shoppers was even higher, at 39 per cent.

Although this may not mean that their total supermarket, or clothes shopping, spend has switched, it still represents a significant loss of revenue for the premium providers and equally significant gain from value outlets.

Andy Wood, managing director at GI Insight, said: 'One key way in which both parties have been looking to keep or win custom is by ramping up their use of incentives and price-promotions, in the form of coupons (money off a particular product) and vouchers (discount when spend goes over a certain amount).

'Premium supermarkets have been creating special offers to return a level of value to existing customers and keep them engaged; value supermarkets have been using price promotions to try and attract even more customers away from the premium providers, even if it is just for a proportion of their spend.

'However, the current flurry of activity around discount and price promotions may be wasting a considerable proportion of its potential.

He added: 'Evidently a third of retail marketers are getting it right, taking advantage of the data they hold, or have gathered, to personalise their coupon or voucher activity to the recipient.

'They have recognised and grasped today's ability to print personalised offers and booklets at a very economic cost.

'The hike in special-offer activity is creating a much more crowded and competitive market for the consumer's attention.

'Those who make the most use of the ability to vary and personalise text and images to the recipient are likely to also be those whose campaigns stand out in the marketplace, and whose redemption rates soar.

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