ThinkboxThis month’s Chart of the Month shows how price promotions drive sales uplift, but not all of it is truly incremental.
Showcased at this year’s IPA Effectiveness Conference, Les Binet and Dom Boyd explored why organisations continue to rely on price promotions, how they assess their effectiveness and what would encourage a shift towards more profitable growth. The study is based on 250 senior marketing and insight leaders from UK consumer goods business, conducted by Censuswide.
This chart shows how price promotions can deliver an immediate boost in sales, often making promotions look highly effective in the short term. But not all of these extra sales are genuinely new. Some are shifted from other stores or channels, some come at the expense of other products, and others are simply purchases brought forward or delayed.
This means much of the apparent uplift may be sales that would have happened anyway, just at a lower price. And over time, the overall benefit of promotions can look even smaller.
The research sets out a six-step programme for reducing reliance on promotions: improve marketing training; learn promotional best practice; use econometrics to evaluate price, promotions and advertising consistently; measure both short and long-term effects; assess pricing power; and reinvest money from ineffective promotions into brand building.
For more information, download all the slides here.
For all Chart of the Month's from the recent months, download the slides from the link above, this includes:
- October: Short-term payback goes beyond 'performance' channels
- September: TV has the broadest cultural footprint
- August: Brand building drives LLM visibility
- July: On average, brands could double their investment and still generate a profitable return, unlocking 11% headline profit growth
- June: TV has the highest share of cultural availability
- May: 30-second TV ads consistently account for half of all impacts
- April: TV advertising is the most trusted medium
- March: Total TV is fundamental for getting ads seen
- January/February: We feel most relaxed when watching TV
- December: TV is the battery that charges other media