Have a great start to the New Year!  

In 2018 let's get to the next level in cutting inefficiencies in promotions   

Accuris benchmark data indicate that large inefficiencies still remain "under the radar". Excessive discounting leading to subsidisation, cannibalisation or stock piling by loyal shoppers represents a staggering 47% of sales on promotion. 

Optimise where your promotional sales are sourced from

The Accuris benchmark study for the UK revealed the following sources of promotional sales. 

Source of Business®™ of £100 sold on promotion

£36

Subsidisation

£9

Cannibalisation

£2

Stock piling

£41

Competitive brand switching

£5

Retail switching

£5

Category expansion

Basis: UK Grocery Multiples, selection of 44 categories, Accuris Benchmark study – data for 2016 in value (pounds)

Subsidisation

36 pounds are subsidisation: sales to shoppers who otherwise would have bought the product at full price.

 

 

Reduce subsidisation by requiring an effort from shoppers in return for receiving the deal; avoid single unit promotions; use multibuys, larger pack sizes, ladder promotions or volume-plus or value added promotions; promote more in large stores and less in small stores; target replenishment shopping trips. 

Cannibalisation

9 pounds are cannibalisation : shoppers attracted to this product and not buying another product of the same supplier.

 

 

Reduce cannibalisation by offering a choice of promotions rather than a “one size fits all” approach. Promote your entire range and use value added or volume-plus mechanics rather than simple price offs.

Stock piling

2 pounds are stock piling: shoppers buying more now, but less than normal after the promotion.

 

 

Reduce stock piling by putting a variety of products in promotion: flavours, sizes, packages.

Promote secondary SKUs (alternatives for main SKU). Avoid predictability; align weight of purchase with shopping trips / store format.

More on these topics: 

Source of Business®™  

Promotion optimisation

Revenue management 

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