Marketing
Issue No. 6 - July/September 2002
Making Sense of Promotional Offers
by Dr David Corkindale
I recently spent four months working in Canada and then passed through the UK on my return journey. In the UK I was struck by the many promotions of the “Two for the price of one” type. This was very widespread and was applied to a range of goods from grocery items to clothes and small items of furniture. I even saw some “Three for the price of one” promotions. This seems a very unwise marketing activity—isn’t it?
At least one major company in the UK seems to think so. Unilever, the Anglo—Dutch conglomerate, that is also a major marketer in Australia with brands in the laundry detergent category and food brands like Lipton Tea, is committing to an increased volume of media advertising over the next five years. It is increasing its media advertising expenditure from 13 to 15% of budgeted sales revenue. It is also heavily reducing the number of brands it will offer internationally: down from 1600 to 400. So, each brand will have considerably more advertising behind it.
These are major moves and must be backed by major reasons. One of the reasons behind this strategy is their attempt to break out of the situation where they are required to pay for shelf listings and to run in—store price promotions by the large retailers. They know that this might do a lot for the retailer but does little for them.
Also, they are seeking to differentiate and add perceptual values to their brands via advertising: this is going back to a role for marketing of finding ways to get consumers to pay a premium for a brand and moving away from price cutting.
Unilever has the advantage of being able to look at the effects of promotions across lots of categories and lots of markets. They have high—powered market analysts, too.
Although Unilever’s circumstances are very different to those of a typical small business in South Australia, we should take note of what they are doing and why—we can learn from their thinking...
