With the majority of the Food and Drink category values being at best flat and often actually in decline, it’s all too easy for manufacturers to throw badly-aimed monies at the problem. Being caught up in an endless spiral of less than perfectly conceived promotional support is a common trend across CPG suppliers. Trapped between the proverbial rock and a hard place, the more money they spend, the lower, if any, the incremental return. Meanwhile, retailers continue to pressurise as they strive to beat like-for-like returns…
Our core belief is that connected organisations perform better. So, when this is applied to clients’ promotional strategies, we strongly advocate having very clear promotional objectives, which themselves are aligned and connected to the supplier’s key growth Drivers within its category strategy.
Promotions planned against core objectives play a key role in a business’s ability to influence shoppers’ purchase decisions, both in-store and online. Our belief is that it is critical to focus promotional activity and investment on the approach that is most appropriate for each brand/segment.
The best promotions are those which clearly demonstrate the strategic link between the investment and the specific consumer or shopper behaviours a supplier is looking to change or reward within its Category Strategy.
Our approach to promotional strategy is to understand the depth and frequency needed by segment, based on relevance and reach measures and then to divide promotions into two types:
- Those that are designed to generate growth for both the category and brand by either attracting new users to the category or driving new usage occasions amongst existing users. We call these Equity promotions. Equity activity can be sub-divided into Brand equity (classic marketing levers) or Category and Shopper equity activations (often referred to as Shopper Marketing).
- Those that are designed to win market share and not specifically intended to drive category growth. These either switch existing category users from other brands to our brand or encourage existing brand buyers to purchase more. We call these Transactional promotions. Transactional activities tend to be more one-off, short term volume generating, price led activities.
Both types of promotions are equally valid, but getting the appropriate balance and understanding the comparative ROIs is at the heart of successful promotional management. If you looked at your promotional calendar, what is the percentage split of your activities and investment? The majority of our clients start at 95/5 Transactional/Equity split, at best.
We are pragmatic enough to understand that you cannot expect to re-balance your promotional investments in one move, but a programme designed to redress the balance to a more 70/30 Transactional/Equity split is where we see the best results for brands and categories.
Weaning yourself off the Transactional promotional drug is never easy, but when your plans are clearly supporting an agreed strategy for your category, you stand a far greater chance of success.