© Kantar Worldpanel© Kantar Worldpanel

The constant battle

PROMOTIONS IN FMCG

© Kantar Worldpanel

© Kantar Worldpanel

Promotions account for around 40% of shoppers’ grocery spend

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12 week ending data

2014201320122011

Promotions share of shopper spend

Percentage

© Kantar Worldpanel

Promotions account for around 40% of shoppers’ grocery spendAnd the discount levels offered show no sign of dropping

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2014201320122011

Discount level of average deal

Promotions share of shopper spend

12 week ending data

Percentage

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What’s the rational behind running a deal?

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1) Recruit buyers into a brand in the longer term2) Grow the category3) ‘Buy’ share

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20102008 2009

Volume

Here’s a soft drinks example in a major retailer – many deals.No evidence of ‘base’ increasing over time as shoppers are ‘recruited into buying at full price’

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Here’s a pizza example in a different major retailerDifferent deal mechanics. Same result.

Volume

20122011

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As a brand owner, what it does do is involve you in a game that’s hard to get out of

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70:3070% chance of growing brand share

when escalating promotions (more deal weeks & higher discounts)

30% chance of growing brand share when de-escalating promotions

(fewer deal weeks & lower discounts)

Based on a 2009 study of 1279 significant brands in the top retailers

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How can I ensure my promotions are influencing shoppers’ purchasing in a positive way in the short term?

So tactical, short term decisions are paramount

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We follow the transaction history of individual shoppers to understand how they react to deals

RSP £2.26

Promotion2 for £3

RSP £2.26

Saturday 1st Sept

Sunday 9th Sept

Thursday 20th Sept

Observing store and brand purchase repertoires for each panellist allows us to quantify true cannibalising & steal

Measuring the interval between purchases made by each panellist allows us to understand whether deals boost overall category buying rates

Observing known panellists means we can reveal the sort of people who actually buy your promotions

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Through careful observation of all households participating in a deal we can quantify where deal volume comes from

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2

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29

16

15 Extra Category Trips

Expanded CategoryVolume

Stolen fromCompetitors

Cannibalised fromPortfolio

Subsidising Base later

Subsidising BaseImmediately

Average from over 60,000 observed grocery

promotional events

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All deals expand shoppers’ brand and category volume in the short term. That is they buy more than they otherwise would have done.

But – do they always make people spend more than they would have done?

Typically we observe the following to be true:

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Incremental Category value

per week (£000s)

That’s to say, shoppers collectively spend less on the category - the expanded volume is outweighed by the subsidised spending at these levels.

At a top-line level we see that it’s hard for the category to benefit at high discount levels

Average from over 40,000 observed branded grocery promotional events

This is the average deal in the average category.

Not all deal types and categories are the sameThis is the category view.

There is a more positive story, typically, for the brand.

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EXPERT SOLUTIONS – ANALYSIS OF PRICE PROMOTIONS

Expert Solutions track real shoppers before, during and after each price promotion they buy. This allows promotions to be examined in forensic detail; line by line, store by store, event by event…

How we can help:

• Detailed Volumetric Analysis and Shopper Understanding in one project

• Rigorous prediction of the impact of adopting a new promotional strategy

• Firm and actionable recommendations from an experienced consultant

© Kantar Worldpanel© Kantar Worldpanel

The constant battle

PROMOTIONS IN FMCG

http://www.kantarworldpanel.com/en/Expertise

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