Do brands need to get into bed with promiscuous consumers?

The news this week that product promotions in supermarkets are failing to produce the increase in sales they once did could prompt not only a change in the way brands and retailers approach the issue of deals but also has potential implications for the relationship between brand and consumer.

A study by IRI detailed how the volume of goods sold on promotion fell last year. The report outlined how the total volume of food and non food products sold on promotion here fell 0.8% year on year to the end of March. The UK remains, however, the most heavily 'promoted' market in Europe with 55% of food and 59% of non food products sold on promotion. That is a huge proportion, especially if you look at the most promoted categories, according to IRI: beer & cider, where 68.7% of goods are sold on deal and confectionary, 66.5%.

There is a long term trend behind these figures of which brands would be wise to take note. Promotions are a perfectly legitimate and valuable sales device whilst they retain the power to surprise or even shock. But when they become the norm and consumers take them for granted, returning a product to a normal price structure and margin becomes tough. This is compounded by situations in which brands are required to bear the burden of expensive trade promotions.

There is a need for research to assist brands in gaining a greater understanding of what goes through the shopper’s mind when they encounter promotions in-store. How do they affect shopping plans and habits and but also perceptions of brands? If continual promotion has the effect of decreasing brand equity in the eyes of the consumer, eroding its ability to command full price over time, what conversations do brands need to have with consumers to counter these perceptions.

Most retailers have moved some way in this direction with the launch (and subsequent rebranding) of economy ranges. This may well represent the future as a recent Mintel study revealed a drastic turnaround in the fortunes of economy and premium ranges. Their report showed that, of the 12,500 products launched in 2012, 9% were economy and 7% premium. This compares with five years ago when it was 9% premium and only 2% economy. The Mintel study further showed that of those surveyed, 55% said they would only buy certain brands and products when on promotion.

There are two learnings here: first, the balance of power is shifting in favour of the consumer. The consumer is beginning to dictate - perhaps by economic necessity or perhaps by a new-found canniness borne out of necessity - the way products are produced and made available to them and at what price points. The success of discounters like Aldi and Lidl supports this theory. Second, with multiples taking control over economy ranges with own label products, brands need to use research more heavily than ever to become intimate with the consumer across all the various retail platforms, understand their changing demands and buying promiscuity and use those insights to inform their NPD and marketing strategies moving forward.