How to Stop Subsidising Full-Price Shoppers — and Target Only Promotion-Sensitive Buyers
- itdev9
- Aug 9
- 4 min read
Promotions are one of the most expensive levers in a consumer goods company’s marketing toolkit. Yet in most categories, the majority of promotional volume is bought by shoppers who would have purchased anyway — at full price. This is the classic “subsidy leakage” problem: a discount intended to drive incremental purchases ends up eroding margins by rewarding loyalists and habitual buyers unnecessarily.
Both PepsiCo and Kellanova have recently shared how they are rethinking promotional strategy to avoid this trap and focus on “promoting to who needs it.”
The Shift from Blanket Promotions to Precision
PepsiCo has been investing in supply chain digitisation, giving them the infrastructure to think more strategically about pricing and promotions. CEO Ramon Laguarta told investors the “sweet spot” is to promote to who needs it rather than blanket messaging — an approach already used on their tortilla chip range to target deal-sensitive shoppers without diluting revenue from full-price buyers.
Kellanova — formerly Kellogg’s North American cereal and snacks business — is also rebalancing its approach. After years of heavy reliance on price increases to offset inflation, CEO Steve Cahillane says they are returning to “traditional” pricing and promotional patterns, now that price stability has returned. Crucially, they are:
Focusing on flexible price-pack architecture to offer products at multiple price points.
Timing promotions to match consumer cash-flow cycles, recognising that households under financial pressure are more sensitive to price at certain times of the month.
Using promotions to exceed retailers’ same-store sales by aligning activity more closely with shopper needs.
Both cases point to a future where promotions are not “one size fits all” but tailored by shopper profile, purchase history, and timing.
Strategies for Targeting Promotion-Sensitive Shoppers
Below are six practical ways CPG brands can focus their promotions where they will have the most incremental impact.
1. Loyalty and Personalised Offer Systems
Retailer loyalty card data is gold for identifying deal-prone households. By analysing purchase frequency, brand switching behaviour, and share of purchases on deal, brands can focus offers on the shoppers most likely to respond to a promotion — and exclude those who routinely pay full price.
Example: Coca-Cola uses Tesco Clubcard data to send drink coupons to infrequent buyers while continuing full-price positioning to loyal buyers.
2. Precision Digital Advertising
First- and third-party data can be used to build custom audiences of promotion-sensitive shoppers online. Dynamic creative optimisation means showing price-led messaging only to these audiences, while brand loyalists see equity-building content.
Example: P&G targets price-sensitive shoppers with coupon messages on Facebook, while brand loyalists receive brand-building videos.
3. Targeted In-Store Activation
Technology such as electronic shelf labels (ESLs) and loyalty-linked apps allows personalised prices or offers in-store. On-pack or receipt-printed coupons can be given exclusively to shoppers who purchased on deal, ensuring the next promotion reaches only them.
Example: Unilever triggers app-based ice cream coupons for deal-prone shoppers during hot weekends.
4. Shopper-Level Price Discrimination in E-Commerce
E-commerce platforms can display different prices or bundles depending on login data, purchase history, and basket analysis.
Example: Mondelez offers special Oreo bundle pricing online to lapsed buyers, regular price to others.
5. Behavioural Triggers
Churn and switching risk models identify shoppers at risk of defecting, allowing brands to send them targeted offers. Timing can also be matched to cash-flow cycles, as Kellanova now does.
Example: Kellogg’s sends “end-of-month” offers on snack multipacks to families with high price sensitivity and children in the household.
6. Collaborative Retailer–Manufacturer Data Use
Retailers and manufacturers can align on “deal-sensitive” shopper profiles and activate only against those segments.
Example: PepsiCo and Walmart jointly target tortilla chip promotions at households most at risk of switching to private label.
Methods, Data Requirements, and FMCG Examples
Method | Data Required | Example from FMCG Sector |
Loyalty & Personalised Offers | Retailer loyalty history, deal purchase frequency, brand switching data | Coca-Cola uses retailer loyalty data to send targeted drink offers to infrequent buyers via Tesco Clubcard |
Precision Digital Advertising | First-party purchase data, behavioural segments, digital IDs | P&G targets deal-sensitive shoppers with coupon ads on Facebook |
Targeted In-Store Activation | Loyalty app link, purchase history, in-store tech (ESLs, QR codes) | Unilever triggers app coupons for ice cream buyers on hot weekends |
E-Commerce Price Discrimination | Shopper login ID, purchase history, basket analysis | Mondelez offers Oreo bundle discounts online to lapsed buyers |
Behavioural Triggers | Basket composition over time, category spend, competitor brand purchases | Kellogg’s uses timing-based offers to match monthly cash-flow cycles |
Collaborative Retailer–Manufacturer Targeting | Shared loyalty data, deal sensitivity scores agreed with retailer | PepsiCo and Walmart align targeting for tortilla chip promotions |
Why This Matters Now
With inflationary pricing settling but consumers still financially stretched, the challenge is to maintain revenue growth without eroding margin. As Kellanova’s Cahillane puts it, success comes from hitting the right price points, the right pack sizes, and the right promotions at the right time — all while continuing to invest in brand and innovation.
In other words, efficiency gains for FMCG promotions are not coming from more discounting, but from better discounting — targeted, timed, and tuned to the shoppers who truly need it.