Magazine: Strategic solutions, part 4 – When to do promotions and when to avoid them

By: trademagazin Date: 2013. 08. 22. 12:07

When Hungarian consumers choose a store, their decision is heavily influenced by promotions. In our latest ShopperTrends survey 31 percent said that they would switch to another store for a good promotion. However, it is also true that 28 percent said they rarely go to another store for the sake of a promotion but they are actively looking for the chance to buy in promotion. 7 percent said they were switching from brand to brand, depending on which one is sold in promotion at the time.

Házy Gaszton modellezési és elemzési tanácsadó Nielsen

It is of both manufacturers and retailers interest to think carefully about what kind of promotions they should use and when. Promotions aren’t always the solution to sales problems, though: those who would like to make sure that their promotion doesn’t cause loss and want ideal results need to analyse price flexibility. There are two types of price flexibility as consumers react differently to changes in the base price than to promotional prices. For instance if the price of one’s favourite cheese brand is increased by 5 percent, the majority of consumers keep buying it; but if at the same time the same cheese type of the competitor is sold with a 10-percent discount, a significant number of consumers may switch to that. Based on analyses, our experience is that certain products aren’t worth to be supported with promotions in certain periods. There are cases when a company is better off if it reduces the base price and sells more of the product this way – but in other situations a bigger price discount may generate considerable extra sales. n

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