Opinion | Has the time come to change retail promotions?
Unfortunately, for 50 years, in-store product promotions have remained unchanged
Brand promotions have several objectives. Creating awareness is one, and repeat business and increased sales are some others. But according to one-to-one marketing expert and database marketing veteran Raj Bhatia, the end goal is to build market share.
He says that two things have to work in order to meet the objective—incremental purchase by existing customers and large number of trials from lapsed or new customers. “While advertising spreads the word, the make-or-break moment is the point of sale, which often happens to be the store.”
Unfortunately, for 50 years, in-store product promotions have remained unchanged. They include limited kind of offers: Price-offs, a free gift (bowls and buckets), bundling (say, four soaps with ₹15 off) or cross-promotions (usually between two different brands, say, biscuits plus oats or milk plus breakfast cereal). Some other kind of promos, such as lucky draws and scratch cards, are now passé owing to logistical constraints.
Several studies show that a majority of standard promotions lose money. So while the consumer gains thanks to discounts and free gifts, the brand has little to show in terms of benefit since such promotions do not generate trials. By and large, it is only the existing customers who avail of these promotions and brands see a sales increase of 15-20%. But, this is only a temporary spike in sales. The sales slide back once the promo ends.
But things need not be dismal if we take lessons from the West, Bhatia advises. In developed markets, brands now have a unique code printed on the product pack itself—it could be a bar code or a QR code, which is unique to every pack. A consumer buys the pack, scans the code and updates the information online or via text on mobile and earns rewards.
“The rewards, in this case, are limited only by the imagination. They could help you enter a lucky draw or make you eligible to e-gift vouchers, discounts on other in-house products or cross-promotions,” says Bhatia. “The most disruptive feature of unique codes is its ability to let brands run promotions on tap—turn them ‘on’ or ‘off’ anytime, or even change rewards at will. For instance, once a brand begins to have a unique code printed on all its packs, it can announce different promotions, or a new set of rewards, every month.”
Bhatia cites the example of P&G, which runs an on-pack scheme for its diaper brand Pampers in multiple markets across the world. The customer can scan the code online. Each code earns the customer reward points. The accumulated points lead to a catalogue full of exciting rewards and offers. According to Bhatia, millions of customers are enrolled in the programme, with 18 million following Pampers on Facebook.
“Which means P&G is engaging with so many of its customers one-on-one.”
“Code-on-pack answers the prayers of marketers looking to disrupt promotions. It does away with the dependence on trade, bringing them unfettered flexibility to create promotions that connect them directly with consumers,” he adds.
Standard in-store promotions are a logistical nightmare from the point of view of managing package design and printing. Also, the brand marketing team is not able to gather much information on the success of the promo owing to paucity of data.
The code-on-pack-driven promotion, on the other hand, poses no logistical challenge. In fact, it offers several benefits. For starters, it eliminates the dependence on retail and distribution. You could buy the product from anywhere—online, kirana store or a big super market, and find the code on every pack. So it is not that a particular merchant is running a promotion. The promo is dealer-agnostic.
The other advantage is that the company is able to get customer data when he/she uploads the code. As a result, it gets to know its customer—who is buying, how much and when.
Clearly, the brand can ensure real-time tracking of its promotion and figure out the markets where it has done well.
That is not all. It also gets an opportunity to engage with the customer after the promo is over. It can reach out to him and send him messages. “Customers who respond can even be targeted with new one-to-one promotions, without any mass media support,” Bhatia says.
Shuchi Bansal is Mint’s media, marketing and advertising editor. Ordinary Post will look at pressing issues related to all three. Or just fun stuff