Necessity, Ease, Price Drive Successful Display Promotions
Products that provide the most lift in display promotions optimally have a unit cost of less than $5 and can be considered either a “must have” or “easy to eat” item. For example, toilet tissue offers an 82% display lift, while yogurt provides a 28% display lift. Beer (15%) and toothbrushes (14%), items that are either sold at a higher price point or typically a less urgent purchase, have much lower average lift levels. In addition, most items that do well in display promotions are easily stockable.
To aid display or temporary price reduction (TPR) promotions of pricier items, which consumers typically respond less well to, Nielsen recommends shifting display space from high- to low-price items (unless they are impulse purchase goods) and providing large volume to drive TPR discounts.
Utility, Frequency of Purchase Dictate Feature Success
Products that do well in feature promotions are typically utility goods which are frequently purchased at mass merchandisers, or frequently consumed food products, especially items that provide a quick lunch or dinner. Price point is generally higher than $5.
Multiples are Expandable
Discounts on purchases of multiple quantities of the same item work best for items with expandable consumption, that are easily stored, where the multiple number makes sense (e.g., a five-pack lunch item that corresponds to a five-day work week). The total price should come in less than $10, with a unit price no greater than $, such as a 10 for $10 offer.
Food, Drug and Mass Promotions Work Differently
Characteristics of a successful food product promotion are different than characteristics of a successful drug product promotion, which differ from characteristics of a successful mass merchandise promotion. Nielsen advises that food customers respond to regular, promoted price changes; while drug customers respond to convenience more than low price. Meanwhile, mass merchandise customers are used to low prices, so TPR promotions lose effectiveness in this channel.
In terms of using a display or feature promotion, food shoppers prove to be high impulse/unplanned utility item buyers who respond well to promotional displays. Drug channel consumers plan their purchases and look for features, but are less responsive to displays. Mass merchandise customers have an average response to display and feature promotions, with shoppers focused on finding overall value within normal price limits.
- Consumers demonstrate lower price sensitivity for products with high brand loyalty that are infrequently purchased or niche offerings with few competitive options.
- When placed on feature, utility products like paper goods and detergents can draw shoppers to the store.
- Food store shoppers tend to be impulse-driven, drug store shoppers come with a purpose and mass merchandiser patrons seek everyday value.
Ahold Banners Value Low Prices
Demonstrating how a food product promotion should be structured, supermarket chains Stop & Shop and Giant-Landover, both U.S. banners of Dutch conglomerate Ahold, squarely focused on providing value to consumers in promotions launched in August 2009. As reported by Retailer Daily, the chains issued new loyalty cards, doubled the items eligible for loyalty discount, and redesigned store layout and shelf design and tagging to reflect an emphasis on value pricing. Stop & Shop and Giant-Landover also began emphasizing specific pricing deals in circulars and other advertising.