Next up was TABS Group founder Dr Kurt Jetta, who said spending on trade promotion is often the second largest item on any food company’s P&L, which makes it all the more baffling that many major CPG companies don't spend more time and energy working out what works, what doesn't, and how to fix the problem.
Trade promotions can and do deliver incremental growth.
Despite the excitement over the brave new world of online coupons and personalized promotions, meanwhile,“old school” strategies from Sunday circulars to FSIs (free standing inserts) still do better.
Loyalty cards don't generate loyalty and alienate 'marginal' customers that are becoming increasingly important to retailers.
The notion that relentless promotions are destroying the equity of leading brands and that consumers are being “trained” to buy stuff on deal is an appealing narrative, but not one that is necessarily fact-based.
An alternative explanation for why consumers are no longer prepared to pay ‘full price’ for some big legacy food brands may simply be because they don’t value them as much anymore. And this is not because they are always on deal, but because shoppers have so many more appealing options to choose from than they did a few years ago in most categories.
The economics of promotions have shifted as the retail market has consolidated and retailers have become more powerful, meaning manufacturers are subsidizing more of the deals, and offering less as a result, which means everyone ultimately loses: the retailer, the manufacturer, and the consumer.