Are marketers missing a trick with promotions?

Almost half of marketers say 40 percent or more of their brand sales are driven by promotions which dwarfs most other marketing investment, according to research from Valassis.

Some 45 per cent of marketers say 40 per cent or more of their brand sales are driven by promotions which, when the cost of price discounts is added to campaign costs, inflates the sales promotion budget ten-fold and dwarfs most other marketing investment.

This promotional dominance is revealed in powerful new research commissioned by market-leading promotional solutions company Valassis.

During the summer, 1,033 consumers and 171 brand marketers gave their opinions on various types of promotion, revealing several areas of misconception.

In fact, only 28 per cent of marketers confidently believe they have the necessary marketing insights to know which campaigns are effective.

For example, three-quarters of marketers (73 per cent) believe "buy one get one free" (BOGOF) promotions will strongly persuade consumers to buy, but only half as many consumers agree.

In fact, when consumer and marketer responses are compared, marketers consistently overestimate the effectiveness of seven of the most commonly used promotions: BOGOF, free product sample, three for the price of two, 25per cent extra free, 200 free loyalty points at a local supermarket, 50p-off coupon and on-pack competition to win a specified prize.

"Marketers are also over-optimistic about how loyal consumers are to their brands, which tends to undermine their perception of the vital role promotions are playing in the fight for sales," said Charles D'Oyly, managing director at Valassis.

Of the categories tested in the research, consumers displayed the highest levels of loyalty to tea brands (68 per cent), but 85 per cent of marketers mistakenly believe consumers almost always buy the same product within that category.

Marketers selected confectionary as the category where loyalty is weakest; however, they still expect 28 per cent of consumers to 'almost always' or 'always' buy the same product.

In reality, only 19 per cent do.

Similarly, still using tea where brand loyalty is strongest as the example, marketers believe 85 per cent of shoppers decide which brand to buy before leaving home, whereas, only 55 per cent do.

"These commonly held misconceptions are influencing marketers to make long-term commitments to some of the most cost-intensive promotions," explained D'Oyly, "it is also influencing how marketers spend their budgets - in-store or direct to the consumer in the home.

"Our research also identified that the belief that consumers feel bombarded with promotions in the home is an exaggerated one - more than half of consumers (55 per cent) agreed they'd 'welcome more information and offers from household product companies'.

"This all suggests that unless marketers are prepared to find out what consumers really feel about their promotions, there is a danger that last year's promotional plan will be endlessly repeated generating a lower return on investment than might otherwise be achievable".

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