In 70% of package-goods categories last year, at least 30% of merchandise was sold with some kind of promotional support, according to Ad Age.
However, while the percentage of packaged goods sold on price promotion increased markedly for the second consecutive year, the average volume lift per promotion fell.
The declining effectiveness of price promotion already has marketers re-thinking their commitment to it, Gregg Ambach of Analytic Partners, which conducts marketing-mix modeling for a number of package-goods marketers, said.
ShopperAnnie in the Ad Age comments says, “CPG couponing tactics are largely ineffective and it’s about time we called them broken and moved on towards a fix.”
Ryan of g86studio.com, also commenting on Ad Age says, “Throwing money at consumers generates behaviors more typical of a substance addiction than genuine loyalty. I think in most cases price promotions are a garbage solution to a complex problem, even in a recession.
Of course, brand builders have long looked down their noses at price-based promotions, because they’re often seen as diminishing brand value.