Brands spending too much time and effort on promotions risk affecting long-term values, as many consumers have now become “immune” to such marketing techniques, the Institute of Promotional Marketing (IPM) warns.
The Drum reports that, according to a recent IPM study, the UK marketing industry invested roughly £55 billion on promotional activities last year, with the majority of this (£40.4 billion) being spent on price cut promotional campaigns. The remaining amount was allocated for value-added promotions that do not provide consumers with immediate discounts, but instead give them the chance to receive a reward or incentive.
A growing number of shoppers are now seeking added value and no longer respond to brands’ discounting initiatives, IPM’s head of insight Paul Godwin said. Brands and retailers should be more concerned with how to achieve a balance between price discounting and promotions, that delivers value not only to them but to customers as well.
Whilst economic uncertainty has whetted consumers’ appetite for bargains, with over 50% now only purchasing brand products when they are on sale, luring consumers with price cuts has gradually become an unfair practice; it actually discourages shoppers from making a purchase unless there’s some kind of deal, according to Godwin.
The increasing number of brands now encouraging price cut promotions in order to attract customers is making it harder for brands to retain their competitive edge over rivals, because “when everything is discounted, then nothing is,” Godwin notes.