Co-Equity/Account-Specific Promotions, coupons and sampling are the most popular product-marketing methods among retailers, according to a new Brand Marketing survey.
Other techniques -- including premiums, rebates/refunds, event sponsorships and promotional packaging -- are also favored, while the use of the Internet still lagged behind the tried-and-true offline promotional techniques.
Brand Marketing's 2001 National Survey of Consumer Promotions also revealed that all brands are not alike: Some promotional vehicles were much more widely used for national brands than they were for store brands, and certain vehicles were much more popular relative to other vehicles when it came to promoting store brands.
Retail promotional spending appears to be leveling off. Only 48% of supermarket executives who responded to the survey said they anticipated increasing their promotional expenditures in 2001, compared to 56% who said they increased their promotional spending in 2000 over 1999 levels.
However, only 4% of the respondents said they expected to decrease their promotional spending this year. That compares with 20% who said they spent less in 2000 than they did in 1999.
About 48% said they expected spending to be about the same in 2001 as it was in 2000, vs. 24% who said spending in 2000 was even with that of 1999.
Almost half -- 46% -- of retailers responded that their biggest challenge in creating and executing effective consumer promotions was securing adequate manufacturer funding. That percentage was nearly double the percentage who replied that their biggest challenge was targeting appropriate consumer groups.
NATIONAL VS. STORE BRANDS
Among the most striking differences found between promotions for national/regional brands and those for store brands was in the reasons retailers gave for conducting promotions for the different labels. While building category sales was the most important objective cited for conducting promotions of national or regional brands, retailers said building category profit was by far the most important objective in conducting store-brand promotions.
Private-label promotions were seen as much less effective in increasing the price of the average basket, an objective respondents said was best achieved through multi-brand tie-ins from different manufacturers.
In addition to being the most effective way to build category sales, promotions for national/regional brands were also the favorite option for increasing store sales and increasing store traffic.
The increasing popularity of store brands was reflected in the increased spending on store brand promotion in 2000 vs. 1999, according to the survey. While 44% of retailers said they increased their spending on the promotion of national/regional brands in 2000 vs. 1999, 60% said they did so for store brands.
Television (including cable TV) and newspapers were equally popular for effectively promoting manufacturer brands, with 88% of respondents citing each medium, but newspapers were clearly the preferred medium for effective promotions of store brands, with 76% of respondents citing that medium. Radio was the No. 2 medium for store brands, with 60% of respondents citing that medium as being effective. Television followed with a 52% response rate, tied with in-store electronic media.
In terms of types of media used to promote store brands, more retailers said they used in-store media -- both electronic and non-electronic -- to promote store brands than those who said they used those media for promoting manufacturer brands.
Retailers appear to be leaning more heavily toward conducting joint retailer-manufacturer, direct-to-consumer promotions this year, the study revealed.
Seventy-six percent of respondents said they planned to participate in such co-equity/account-specific activities in 2001, vs. 64% who said they did so last year. The increase could be attributed to the fact that joint direct-to-consumer promotions ranked highest in terms of effectiveness, with 32% of respondents citing those activities as being the most effective.
In-store sampling/demos remained the most popular co-equity/account-specific activity for retailers in 2001, with 84% of respondents saying they planned to host such activities this year. The popularity of in-store sampling/demos declined from 2000, however, when 92% of respondents said they conducted such promotions.
In-store sampling/demos was ranked No. 2 in terms of effectiveness among co-equity/account-specific activities, with 28% saying they were the most effective.
Local radio tie-ins also declined in popularity this year. Respondents ranked it as the second most commonly used co-equity/account-specific activity in 2000, with 76% of retailers participating in such promotions, but this year it slipped to third place -- behind in-store sampling and direct-to-consumer promos -- with only 68% saying they planned to do radio tie-ins with manufacturers in 2001.
Other co-equity/account-specific activities remained fairly consistent year-to-year. Twenty-four percent of respondents had frequent-shopper club tie-ins planned for this year, vs. 28% who did so last year. Local television tie-ins garnered a 36% participation rate in both years, while sweepstakes promotional activities increased slightly this year, from a 40% participation rate last year to 44% this year.
Retailers' biggest concerns in executing co-equity/account-specific activities are restrictions imposed by manufacturers, time constraints and an inadequate payoff. Of lesser concern were having adequate labor to execute such activities and synergy between the brands.
Circulars were the most popular method retailers used to distribute coupons last year. Almost all -- 96% -- of survey respondents said they used promotional coupons in 2000, with 75% of those saying they had distributed coupons via circulars.
In-pack and on-pack couponing was the No. 2 delivery vehicle, with 67% citing the use of that method in 2000, followed by direct mail and newspaper/freestanding inserts, with a 58% use rate for each of those two coupon vehicles.
Distributing coupons with samples, distributing them in-store electronically and distributing them in-store by non-electronic means, were each cited by slightly more than a third of respondents as being done last year.
The least popular methods of coupon dissemination were distribution via the Internet, with 21% citing that vehicle, and distribution in magazines, with only an 8% participation rate.
Circulars and in-pack/on-pack were also ranked as the most effective couponing vehicles for building category sales and profitability. Those two vehicles, along with direct mail, were cited as the most effective ways to increase overall store sales, drive store traffic and increase the size of the total average market basket.
The use of couponing vehicles varied according to whether the promotion was aimed at store-brand products or national/regional-brand products. In general, coupons were more widely used last year by retailers to promote national brands than they were to promote store brands. Circulars were the most popular delivery vehicle for both, and direct mail and newspaper/FSI were also popular vehicles for both store and national brands.
The biggest disparities between the use of coupons for store brands and national brands were distribution with samples and in-pack/on-pack distribution. Thirty-eight percent of respondents said they distributed coupons with samples for national/regional brands, vs. 10% who did so for store brands. Similarly, 62% said they used in-pack/on-pack coupons to promote national brands, vs. 19% who did so to promote store brands.
In-store sampling was by far the most popular method of getting samples in consumers' hands in 2000. Of the 96% of the respondents who included sampling in their promotional arsenals last year, 88% said they provided product samples in their stores.
Event sampling was a clear-cut No. 2, with 54% of respondents saying they used that vehicle of sample distribution. Sampling via newspapers followed with a 29% participation rate, then direct mail with 17% and Internet-generated sampling with 5%. Doorknob sampling was not cited as being used for delivering samples in 2000 by any of the respondents.
In-store and event sampling were also cited as being the most effective techniques for building category sales, building category profitability, increasing store traffic and increasing the size of the average market basket.
There were few differences between the types of sampling used to promote store brands and the types used to promote national/regional brands. The biggest disparity was in the use of direct mail, which was cited as being used by 13% of respondents for national/regional brands, vs. 4% who used direct mail for sampling of store brands.
Although premiums are not nearly as popular among retailers as coupons and samples, most of the respondents in the survey -- 68% -- said they did use premium vehicles last year.
Those who did use premium vehicles cited distribution with products and distribution with purchases as the preferred methods. Three-fourths of retailers who offered premiums used each of those two promotional vehicles, and 53% of respondents said they offered premiums with multiple purchases.
There was some disparity between the use of premium vehicles for store brands and their use for national/regional brands. In promoting store brands, offering premiums with products was much more popular than offering them with purchases. Sixty-five percent of respondents said they offered premiums for store brands with products, vs. 47% who said they offered premiums for store brands with purchases.
In terms of effectiveness, respondents cited the offering of premiums with products highest. For the objectives of building category sales, increasing store sales, increasing store traffic and raising the size of the average market basket, offering premiums both with products and with purchases were ranked as being the most effective vehicles.
Of the 84% of retailers in the survey who said they used rebates or refunds (cents-off discounts) last year, the most commonly used vehicle for distributing them was a tear pad. Seventy-six percent said they used tear pads, vs. 67% who used in-pack/on-pack vehicles, 48% who used instant discounts (frequent shopper cards) and 5% who used a Web site.
The three most popular rebate/refund vehicles also were cited as being the most effective in terms of the various retailer objectives: building category sales, building category profitability, increasing store sales, increasing store traffic and increasing the size of the average market basket.
In general, rebates and refunds were more commonly used by respondents to promote national and regional brands than they were to promote store brands. The biggest disparity occurred in the use of tear pads, which were used by 71% of respondents for national/regional brands, but by only 19% of respondents for store brands.
In-pack/on-pack promotions and instant discounts were roughly twice as popular as vehicles for promoting national/regional brands as they were as vehicles for promoting store brands.
Of the 72% of survey respondents who said they participated in events/sponsorships as promotional vehicles last year, the vast majority -- 94% -- said the activities involved a charity or other cause. Event/sponsorship promotions tied into a charity or cause also were reported as being the most effective way to build category sales, build category profitability, increase store sales, increase store traffic and raise the size of the average market basket.
Promotions involving a sports activity were ranked No. 2 in terms of their overall popularity with a 44% retailer participation rate, followed by entertainment activities, 33%, and television, 28%. No retailers in the survey said they tied event/sponsorship activities to movies.
The survey revealed that there were few differences between the use of events and sponsorships to promote store brands and the use of such vehicles to promote national and regional brands. Store brands did have a slight edge in popularity for promotional tie-ins with charities/causes and entertainment, however.
Bonus packs were the unanimous method of choice among the 80% of respondents who said they used promotional packaging vehicles in the past year. In terms of effectiveness at building category sales, building category profitability, increasing store sales, increasing store traffic and raising the size of the average market basket, bonus packs also were No. 1.
Cents-off pricing and multi-packs were each reported to be used by 85% of those who used promotional packaging.
Promotional packaging was far more popular for national and regional brands than it was for store brands, although bonus packs also ranked high as a vehicle for store brand promotions. Sixty percent of respondents said they used bonus packs for store brands, while only 25% used cents-off pricing and 30% used multi-packs.
The Web has not yet proven itself to be a popular promotional vehicle. Only 44% of respondents said they had a Web site directed at consumers, and just 42% of those use the Web site to offer consumer promotions. Another 33% of those that have Web sites said they planned to offer consumer promotions in the next year.
One third of those respondents that have consumer-oriented Web sites include links from their sites to those of manufacturers offering promotions, and another fourth of respondents said they plan to add that feature in the next year.
The biggest concerns retailers had about online marketing efforts were that such activities require too much labor to keep them current and that Web promotions did not have the reach or volume to impact sales. Just over half of the respondents each cited those two reasons. Other concerns included "coupon misredemption issues," consumer privacy issues and the risk of credit card fraud.
Thirty-one percent had no concerns about online marketing.
The three most common methods used to communicate Web site addresses/offerings to consumers were store circulars, store signage and newspaper ads. About one-fourth of the respondents who have consumer-oriented Web sites used checkout receipts to tell customers about their Web sites.