Shopper Digest: Promotions in the Current Day and Age

Whether it’s to expand your shopper base or to encourage your loyal customers to purchase more, promotions are essential for growing your business. Given their importance, getting the strategies and promotional mechanics right should be among a brand’s top priorities. However, despite the benefits, over-promoting can also erode margins. Therefore, striking the perfect balance between pricing and promotions requires careful consideration to optimise brand growth while maintaining profitability.

With shopper data, we can track a brand’s performance over time, using metrics such as its penetration within the household population, or even the total monetary value spent by households in Malaysia on a particular category or brand. For those familiar with our services, we can further break down the data by demographics (e.g., ethnicities, regions, household income) as well as performance across channels and key retailers. To delve deeper into the factors driving a brand’s growth or decline, one crucial perspective would be to examine the promotions that attract shoppers.

We can analyse the promotional mechanics employed by the market and observe how they evolve over time. Examples of promotional mechanics include price promotions, primarily through price-offs and discounts. Additionally, product promotions such as "Buy 1 Get 1 Free" offers and extra volume/bundle packs are quite prevalent in certain categories. Furthermore, there are promotions aimed at increasing shopper engagement, such as contests, redemptions, and free gifts.

We examine the promotions executed for Category A and the value contribution of each type of promotion. As is typical in many categories, price promotions account for the majority of promotional sales and have increased compared to last year, driven by the market leader, Brand A. However, this has not translated into overall category growth, as shoppers are purchasing significantly less outside of promotions. This raises the question for Brand A: Are we truly employing the best strategy here? This could also present an opportunity for the brand to reassess its strategies, especially as the next largest competitor, Brand B, is gaining overall value, bolstered by an increase in price promotions, with Brand B’s shoppers maintaining purchases outside of promotions.  

Another example explores the impact of the boycott period in late 2023 among Malay households and how competitors responded. Brand A, as the market leader, faced losses during the BDS movement due to its recognition as an MNC. Meanwhile, Brand B, the closest competitor, slightly increased its promotions, recognising that shoppers in the category would likely seek alternatives. By ramping up price-related promotions, Brand B managed to attract even more shoppers. This provides Brand A with insights into category movements and competitor actions, allowing them to capitalise on current market dynamics.  

Considering these factors, understanding the optimal promotional mechanics and tracking their progress over time can help in developing strategies to either grow or combat a decline in the shopper base. However, the answer to "why?" often remains elusive with basic data alone. To gain deeper insights into shopper purchase decisions and the impact of promotions, Kantar Worldpanel offers Analytics solutions. These allow us to delve into shopper behaviour, helping to optimise strategies and resolve previously unanswered questions.

To progress as a brand, gaining penetration, that is, growing your shopper base, should be one of your top priorities. To achieve this goal, optimal strategies must be implemented, including promotional mechanics that capture the attention of new shoppers or even spark renewed interest among existing ones. Identifying which promotions are effective and which are not will undoubtedly sharpen these strategies and maximise returns. Supported by the deeper understanding offered by our Analytics solutions, the development of promotional action plans will become more targeted and efficient.

By examining different metrics, whether by penetration or value/volume share, we can determine how promotions are performing for a category or brand. Additionally, by filtering through channels/retailers or demographic profiles, we can identify which promotions are effective for specific groups of shoppers. Armed with this knowledge, more effective promotional strategies can be devised to increase your shopper base or further engage loyal customers. Worldpanel provides ongoing tracking of such measures and many more on a consistent four-weekly basis to assist clients in meeting their business needs.