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IRUK Top500 The Customer Report: 2018

IRUK Top500 The Customer Report: 2018

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GUEST COMMENT Aisle be back: why promotions prior to store are better for driving brand value

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GUEST COMMENT Aisle be back: why promotions prior to store are better for driving brand value
GUEST COMMENT Aisle be back: why promotions prior to store are better for driving brand value
By Oliver Felstead

With household expenditure under sustained pressure, UK shoppers are placing greater emphasis on value – increasingly basing purchasing decisions on promotional offers and displaying lower levels of brand loyalty than ever before.

Recent Bain/Kantar research shows that, on average, 50% of a brand’s ‘loyal’ users will not be loyal in 12 months’ time and that, at present, only 42% of shoppers have a particular brand in mind when they go shopping. Revealingly, promotions now account for 40 % of branded product sales.

In response, the retail environment has become dominated by promotions. Across all the major UK supermarkets, the number of in-store offers has increased while the depth of discounting has reached unparalleled levels. As competition intensifies, this promotion-led approach appears certain to continue. But manufacturers’ ongoing battle for short-term volume gains, using discounts and multi-buy offers as a primary weapon, could lead to a further erosion of brand loyalty.

The good news for marketers is that it is possible to run tactical promotions that appeal to price sensitivity without damaging long-term equity. However, to achieve this, they may need to focus activity away from the supermarket shelves.

Limited shelf-life: building brand equity in-store

The in-store environment is not the easiest place to build brand equity. In fact, when it comes to competing on anything other than price, supermarkets could hardly be less suitable for building brand value or influencing consumers. Not only are supermarkets cluttered with promotions, but busy shoppers are also less likely to pause, mid-shop, to consider sophisticated brand characteristics and attributes.

There are, of course, examples where marketers are finding ways to negate promotional promiscuity by adding value to their in-store promotions, for example combining price promotions with new innovations such as a product variant or limited edition range. However, most brands are not doing this, and continue to compete on price.

Luckily, we can see from consumer behaviour that price is not shoppers’ only consideration, even in these cash-strapped times. Although the economic climate has made consumers more cost-conscious, shoppers are not migrating en masse to own-label products, suggesting that brand personality still carries weight in the purchasing decision. However, against the backdrop of incessant product promotions the opportunity to build brand equity and value in-store remains extremely limited.

So how can brand marketers get shoppers to look beyond the deal, get more long term value from promotions? How can they appeal both to customer demand for price promotions as well as effectively building brand value in the long-term?

Do more pre-store

Increasingly, marketers are finding that digital engagement with consumers before they reach the supermarket can have a strong influence on brand loyalty. By expanding promotions beyond the store and targeting customers as they plan their shop, marketers can exert greater control on how they communicate a brand’s full value proposition, and combine short-term promotional tactics with long-term brand-building strategies.

A key reason for this is that by targeting shoppers before the store they have the full variety of digital marketing at their disposal. The online environment – unlike the supermarket - provides great scope for creativity, as well as the opportunity for two-way interaction. This can be exploited to drive brand loyalty. As a recent study from the IAB and PwC shows, the FMCG sector has become the joint biggest online ad spender, highlighting that, brand marketers are discovering that it is through interesting, entertaining or useful content that brands can cut through the noise to reach customers, motivate them to start engaging, and ultimately ‘lift’ the brand relationship beyond the purely transactional (and price-driven). The challenge is to better connect consumers’ desire for price promotion with more strategic marketing activities that reinforce long term brand equity.

One way of doing this is to use digital coupons within online campaigns. Rather than replacing in-store promotions, coupons provide the opportunity to compliment them by delivering offers that align with consumer sentiment whilst, at the same time, giving marketers greater control over brand equity. Coupons have become a key component in coordinated marketing campaigns, enabling manufacturers to leverage promotions alongside other typical content mechanics. The ability to link promotional coupons with standard campaign activities such as surveys, competitions, social referencing, referral programmes and word-of-mouth advocacy, is providing marketers with powerful ways to build brand equity outside of the supermarket aisles. These campaigns are being proven to appeal to customer sentiment in the short-term, whilst more effectively building brand value in the long-term. The knock-on implications for brand loyalty are obvious.

Embedding digital coupons within campaigns is proving an invaluable tool in helping brands reach and engage new and existing customers. A February 2013 Evolution Insights survey revealed that 60% of primary shoppers are more likely to start engaging with a brand – such as registering their email or sharing their views – if they are offered something in exchange, such as money off coupons. 61% said they would maintain engagement if given a coupon, while 51% said that money off coupons would increase the likelihood of them trialing a product.

Some of the most effective FMCG marketing initiatives in recent years have used the digital channel as a key engine to build brand equity. For example, initiatives such as recipe cards that suggest the innovative use of a particular ingredient, or a video endorsement that provides product advice, can each be linked to a print-at-home coupon that will help enhance the performance of the campaign.

Not only this, but consumer appetite for them is way beyond marketers’ expectations. A study by the IPM in 2012 showed that marketers have persistently and massively underestimated the power of a relatively small value to motivate the use of a coupon.

The checkout

With 58% of shoppers visiting the supermarket without a particular brand in mind, it’s clear that much more can be done to exploit consumers’ desire to plan ahead to improve the value of their shop. The opportunity to drive growth is huge. The solution, however, will not come solely through traditional in-store promotions, but through measured and coordinated brand messaging that targets value-seeking customers before they reach the store. The Evolution Insights research highlights the valuable role that coupons can play in helping customers make purchasing decisions before they reach the supermarket. Indeed with respect to print-at-home coupons regularly used by brands within digital marketing activity, the simple action of selecting and printing a coupon is in fact a strong indicator of purchase intent.

The consumer use of digital channels continues to grow, and marketers are beginning to recognise that they must do more to reach shoppers in ways that reflect this. But as the trend towards digital engagement gathers pace, the question remains: does there need to be a change of emphasis in how brand promotions are delivered? Should brands be paying more attention to extending promotions beyond the supermarket and into the digital domain?

The digital channel presents a compelling opportunity to deliver creative and engaging brand communications in a medium that, as research shows, fits in with consumers’ lifestyles. The challenge now is to optimise it. There are increasing examples of brands that are embracing online media – right across the brand life-cycle – to develop innovative campaigns that target customers at home as they plan their shopping. Many are recognising that the use of digitally distributed print-at-home coupons as part of an integrated online marketing programme can significantly help increase sales volumes and build long-term brand equity.

This all goes to prove that the concept of customer loyalty is not approaching its sell-by date. But to achieve it, marketers may need to consider taking promotions beyond the in-store environment and into the digital age.



Oliver Felstead is the UK and Europe managing director at Coupons.com.
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