IPM's fast.MAP Marketing-GAP presentation
Transcript of IPM's fast.MAP Marketing-GAP presentation
What we ask
• Should we be optimistic?
• How important is promotional marketing?
• Price discounting and couponing still seem to dominate spend. Should they?
• Does the changing dynamic in retail relationships mean a shift in roles for promotional marketing?
• Is brand switching down to price or creativity?
Source: Mintel 2013
Consumer Expenditure at constant 2013 Prices 2007-2017 (ONS/HM Treasury) £ Billion
940
960
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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Market Sizing
• 1999 – Mintel published a report entitled ‘Mintel Special Report:
Sales Promotion’ in which national expenditure on sales promotions was estimated to be £8.6 billion a year.
• 1987 – Mintel used estimates of 1987 report by the Institute of
Sales Promotion (ISP) which placed expenditure at over £2 billion a year
• 2008 – ISP estimates total of £25.6 billion invested in Promotional
Marketing
University of Westminster Business School
“Accordingly, it can be concluded that the Promotional Marketing expenditure on a national level exceeds £31.35
billion and given the increasing use of price discounts across a number of sectors in the United Kingdom, the variety in Promotional Marketing (with the advent of
digital channels, particularly social media), the figure is likely to grow further”
University of Westminster Business School
Sizing the UK Promotional Market 2012
Size of UK Promotional Market Estimates 1987 – 2012 (£ Billion)
2.7
8.6
25.6
30
33
0
5
10
15
20
25
30
35
1985 1990 1995 2000 2005 2010 2015
ISP
Mintel
UWT
ISP
FSB/CIM
Size of UK Promotional Market Estimates 1987 – 2012 (£ Billion)
2.7
8.6
25.6
30
33
0
5
10
15
20
25
30
35
1985 1990 1995 2000 2005 2010 2015
ISP
Mintel
UWT
ISP
FSB/CIM
So what next?
Big Numbers
• £14.1 billion on grocery discounting
• £26.3 billion on other price discounting
• £1.7 billion EU bill
• £13 billion annual payments by UK to EU
Big Numbers
• £14.1 billion on grocery discounting
• £26.3 billion on other price discounting
• Almost £10 billion on drugs and prostitutes
UK Promotional Market
Total Market £55 Billion
Price Discounting
Grocery £14.1 Bn
Other £26.3 Bn
Agencies
£2.9 Bn
Comms
£7.2 Bn
Rewards
£4.3 Bn
(inc. £2.7 Bn coupons)
Price Discounts and Couponing
• Majority of spend is going against discounting rather than adding value
• “60% of fmcg sales are through price promotion, which…is far too much of a reliance on one promotional mechanic, particularly one which erodes brand value”
Clive Humby (IPM Great Loyalty Debate)
• By definition, loyalty is long term, not short term.
So What?
• What is happening within these big numbers?
• Understanding the dynamics of the numbers in any set of data is key
• Real gap clearly exists between marketers perception and shopper attitudes and behaviours
– Marketers underestimate numbers who say would redeem at different coupon values
Is there a minimum face value below which you are not motivated to save and redeem coupons?
94%
90%
78%
59%
57%
39%
25%
17%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
£5
£1
50p
20p
Marketer Consumer
Why?
• Attitudes to value rather than specifics around price discount to individual brands
• Couponing is a valuable tool used surgically and targeted properly • Marketers
– thinking about their own brand experience – couponing is expensive and doesn’t always deliver required sales
uplift
• And shoppers may be saying “We will use them but… – …In the right place – …At the right time – …On the right brands – …In the right way
Is this what we should be looking at?
£0.20 £0.50 £1.00
£5.00
40%
20%
10%
5%
0%
10%
20%
30%
40%
50%
£-
£0.50
£1.00
£1.50
£2.00
£2.50
£3.00
£3.50
£4.00
£4.50
£5.00
Would NOT redeem coupons
Coupon Value % Would NOT redeem
Promotions used by consumers in past 12 months: Price Discounts (% used)
45 48
55
44
0
10
20
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60
2014201320122011
Promotions used by consumers in past 12 months: Coupons (% used)
0
20
40
60
80
100
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180
2014201320122011
Web Coupons Mobile Coupons Coupons D2D/Street
Coupons Press On Pack Coupons
Promotions used by consumers in past 12 months: Coupons
45
38
11
0 0
23
43
32 33
2014201320122011
Price Discounts
Web Coupons
MobileCoupons
CouponsD2D/Street
Coupons DM
Coupons Press
On PackCoupons
Why the dip?
• 2012 Olympics effect
• Appeal of price discounts down to 2011 level as consumer expenditure rises
• Appeal of couponing as a technique dips even further
• Alongside shift to discount retailers
• We saw this start in 2013…
Shopper apathy
“The potential danger entailed by supermarkets purely focusing on price is that consumers could develop a level of
apathy towards such pricing strategies…arguably, shoppers have come
to see the discounted price as the ‘real’ price of the products in these cases.”
Attitudes towards Pricing and Promotions in Food and Drink - UK - April 2013; Mintel
Continued into 2014
“Shoppers are questioning
whether loyalty cards, such as Clubcard, are more helpful to
the supermarket than they are to the shopper.”
January 2014
Reality bites
• Worrying for all serious data-driven enterprises and marketers
• If true – Tesco’s troubles are an unambiguous warning – Data rich loyalty programs and analytics alone don’t
cut it – Lidl and Aldi at one end are stealing clear competitive
advantage with • Slightly lower prices and • Simpler shopping experience
– Waitrose are also trying something different
Response to price cutting
• This is possibly more about retailer loyalty than brand loyalty
– Everyone needs to retain shoppers but shoppers are going elsewhere…why?
• modern shopper shopping little and often
• increased role of convenience stores, online shops and local supermarkets
– For promiscuous shoppers the value in points at a single retailer is diminishing
Waitrose response to the Loyalty question
“It is about what consumers value today, not what they
valued historically. So Green Shield Stamps, or points, were a response to what happened
post-war to people having tokens and collecting things. I just don’t think that is where
the world is now.”
Mark Price, MD, Waitrose
Loyalty is not just about using big data
• “We talk a lot about ‘big data’ but what is actually needed are those small nuggets of real consumer insight amongst all the noise.”
IPM Great Loyalty Debate
• “Giving free coffee or free newspapers is disruptive to the market, but I think that is what customers want, I don’t think they want a point. I mean, what is a point? I think it’s meaningless”
Mark Price, MD, Waitrose
IPM Great Loyalty Debate
• Loyalty isn’t something that any customer owe retailers or brands – it’s something retailers and brands owe customers. – Thank You
• At its simplest, loyalty is about saying thank you to your shoppers for supporting you and encouraging them to stick with your brand.
– New Paradigm • FMCG marketers and retailers need to
find other ways of promoting products to add value and build brand equity.
A harsher interpretation
“…today’s Tesco simply lacks the innovation and insight chops to craft promotions, campaigns and offers that allow it to even preserve share,
let alone grow it.” Michael Schrage, MIT
• Not sure that is necessarily the case with Tesco • Disenchantment is there but the biggest issue is
lack of engagement and long term decline in relationships
• For brands it has to be a worry about failure to add value
Impact of promotions
• 42% of ALL shoppers told fast.Map that they bought MORE products than they had planned to because of extra long term rewards from clubs or promotions such as these: – Club cards – Token collectors – Websites loyalty schemes – Newspaper collectibles – Other post/series offers
• Yet this doesn’t mean this was the most cost effective route
Danger in promotion becoming product
• Surprise and Delight can become Expectation – consumers conditioned to expect a certain level of
reward through points based schemes.
– marketers need to inject ‘surprise and delight’ into loyalty programmes.
– moves us away from that feeling of entitlement and expectation.
• Could other promotional techniques be used to surprise and delight?
Promotions used by consumers in past 12 months: Free Draw / Prize Competitions / GWP
15 15
18
16
28 29
31 30
37 36
43
36
0
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30
35
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45
50
2014201320122011
GWP
Competitions
Free Prize Draw
Brand switching techniques
• Let’s look at brand switching
• Typically we would expect strongest techniques to be: – Couponing
– Price discounts
– Anything that adds value – GWP / Guarantee
• Reality is somewhat different year on year
As a Brand Switching Technique: OFTEN Price discounting / Sampling / Mobile Couponing – all flat
2014
2013
7 Basic Plots
• Overcoming the monster
• Rags to riches
• The quest
• Voyage and return
• Comedy
• Tragedy
• Rebirth
Summary
• Growing and dynamic promotional marketplace - £55 Billion • More than £10 Billion on promotions WITHOUT price discounting
and couponing • Real gap remains between marketers perception & shopper
realities • Couponing is too powerful a tool to dismiss but too easy a tool to
use indiscriminately • Added value isn’t necessarily a weaker driver than money off for
brand switching and it can be more cost effective • Creative promotional marketing actually drives brand switching and
brand loyalty • Digital channels are engaging more audiences but closer
engagement with creative promotional techniques is needed
Summary
• This is not a formula business – mix of art with science, craft with technique, experience with opportunity
• No absolute truths here – just tools that help us make better informed decisions
• As ever, the Marketing Gap raise as many questions as it gives answers
• We all as promotional marketers need to consider the results of the full study in the context of our own brands
• Response is better than redemption