Sampling and demonstrations, especially multi-product themed events, are the most successful form of retail promotions, according to a propriety SN retailer survey.
Forty-two percent of respondents said sampling and demonstrations are more effective than any other promotional tool, according to SN's 2006 Survey of Promotional Practices.
"Our biggest way to promote is within the store with demonstrations and sampling of product," one respondent wrote.
When it comes to the type of sampling and demos, more than one-third (36%) said themed events work best.
"We are planning on some themed in-store promotions and events throughout the next year," according to a survey participant. "We're more focused on big events to drive traffic."
"We're using unique themes every other month with a strong, leading manufacturer tie-in," another said.
One retailer noted that while it once ran themed events only for the holidays, it changed its strategy, and now runs them more frequently.
"We find that running a special event even once a month is not enough," the respondent said. "We now run a weekly themed event to keep things fresh and exciting."
Results show that traditional food retailers are learning from companies like Costco, which uses sampling to create in-store excitement, said Ted Taft, managing director of Meridian Consulting in Westport, Conn.
"People say part of the fun in going to Costco is that it's like a treasure hunt - you'll never know what you'll find," he said. "Sampling is a big reason for that."
Themed events, such as those tied to summer barbecues, natural and organic food or Italian meals, are especially important because they provide consumers with meal ideas.
"People have chicken-fatigue; they don't want the same old food," Taft said. "They're always looking for new ideas."
Plus, themed events are more engaging to consumers than other types of promotions, added consultant Bill Bishop, president of Willard Bishop, Barrington, Ill.
"Themed events work so well because they're understandable and appealing from a distance, as opposed to one item at one price," Bishop said.
COUPONING
Despite the fact that redemption of manufacturer-issued coupons continues to slide, 71% said they feel couponing is still an effective promotional tool.
When asked why, 77% said it encourages product trial, while 28% said it increases brand awareness.
"Coupons have tremendous advertising value," said John Morgan, executive director of Association of Coupon Professionals, Des Plaines, Ill. "So even though a consumer may not redeem a coupon, they still see it, remember the product, put it on their grocery list and buy it."
Further, 72% said their company is more apt to support a product via shelf signage or display if a manufacturer has dropped a coupon for it.
Of the 29% who said couponing is not an effective promotional tool, 86% said it's too burdensome and time-consuming for the consumer, while 20% said it is not targeted enough.
Morgan of ACP countered, however, that while freestanding inserts are indeed mass marketed, there are plenty of targeted forms of coupon vehicles, such as coupons sent via direct mail based on retail loyalty card data. Even some FSIs can be targeted, he said, referencing manufacturer coupons that appear next to a retailer ad with a sale price of the product featured.
LOYALTY CARD DATA
Retailers are becoming more skilled at leveraging the value of consumer data obtained via loyalty cards, according to the survey.
Nearly two-thirds (62%) said their company has started to analyze the data on its own, rather than rely solely on manufacturer analysis.
Consultants SN interviewed said the two-thirds figure seems high, citing that while some retailers, like Kroger's partnership with British loyalty-marketing firm Dunnhumby, are particularly adept at mining loyalty card data, most have a lot of learning to do.
Gary Hawkins, chief executive officer, Green Hills Farms, Syracuse, N.Y., said the majority of retailers simply use it to analyze promotions to understand if a given promotion helped drive incremental sales in a certain time period or if it increased movement of a product, Hawkins said.
And only a handful of companies have integrated the use of customer data into their management and financial reporting on an ongoing basis, he said.
Green Hills has taken loyalty marketing to a new level with Smart Shop, a unique technology that provides customized savings based on individual buying habits. Participants receive about 20 personalized offers each week.
Meanwhile, 16% said their targeted-marketing programs are based solely on the data.
And nearly one-third said their company is sharing loyalty card data with manufacturers more now than in the past for targeted promotions.
But the information comes at a cost, as nearly one-quarter (22%) said their company is charging manufacturers more for the data than it did in the past.
Regardless of the tactic used, the majority (43%) of respondents said their company is relying more on promotions than in the past.
Just 11% said they are relying less on promotions.
Cents-Off Support
Retailers are more likely to support a coupon product
Redemption of manufacturer-issued coupons continues to slide. Do you feel couponing
is still an effective promotional tool?
No 29%; Yes 71%
Is your company more apt to support a product via shelf signage or display if you know a manufacturer has dropped a coupon for it?
No 28%; Yes 72%
Source: SN's 2006 Survey of Retail Promotions
Data Management
Retailers are taking control over loyalty card data analysis
My company has started to analyze the data on its own, rather than rely solely on manufacturer analysis 62%
My company is sharing loyalty card data with manufacturers more now than in the past for targeted promotions 31%
My company is charging manufacturers more for the data than it did in the past 22%
My company is charging manufacturers less for the data than it did in the past14%
Source: SN's 2006 Survey of Retail Promotions
Respondents selected all that apply to loyalty card data.
Exciting Events
Sampling and themed in-store events are getting the bulk of retailer attention
What has been the most successful form of promotions at your company over the last year?*
Sampling and demonstrations42%
Themed in-store events36%
Targeted marketing in general28%
Contests and sweepstakes 26%
Sponsorship of external events18%
Couponing 16%
Targeted marketing based solely on loyalty card data 16%
Ethnic promotions 16%
Source: SN's 2006 Survey of Retail Promotions
*Respondents selected all that apply
ABOUT THE STUDY - This is Part 2 of SN's three-part Survey of Promotional Practices. Sixty vice presidents, owners, store managers and other retail officials responded to a questionnaire posted online last month at www.supermarketnews.com. Of the respondents, 57% responded for the entire company. About one-third (32%) represented companies with less than $500 million in revenues; 22%, $1 billion to $2 billion; 18%, $500 million to $1 billion; 14%, over $5 billion; and 12%, $2 billion to $5 billion. The first phase of the study was published on Sept. 4, and highlighted findings from a propriety study on manufacturer promotional practices. The last part of the report will run Nov. 6, and will discuss how consumers respond to various promotional tactics.
