13 August 2020

Tactics in Tough Times: Compete On Price or Provide Added Value?

With the UK facing the biggest economic downturn in 11 years and our PM warning that the UK has a long way to go before the economy improves, we reflect on what tactics FMCG brands can put in place to weather the storm ahead.

Right now, we’re seeing brands typically follow two approaches; they’re either competing on price or finding ways to deliver added value to consumers.

Compete on Price

Consumer confidence has plummeted with Covid-19. With warning of tough times ahead, consumers are becoming more cautious in their spending.  In fact, 46% of consumers are “paying more attention” to adverts, offers and promotions than they were before the pandemic [1].

Using coupons to incentivise purchase and tempt value-driven customers is one tried and tested way to bring consumers back to your brand. When we look back at the previous financial crash in 2008, coupon redemption increased by 23% from 2008 to 2009 [2]. That momentum continued well into 2011 and helped to deliver critical sales at a time when consumers were less willing to spend.

But in an increasingly paperless world, using reimbursement solutions such as cashback is a strong alternative for brands looking to reward customers for their purchase and loyalty. And with eCommerce now accounting for 13% of all UK grocery sales [3], cashback enables brands to offer the same incentive – irrespective of the channel in which the purchase was made. It’s also proven to be a great way to get consumers to try your product. This  could be even more relevant now that health and safety concerns have threatened traditional product sampling.

Provide Added Value

Ahead of lockdown, we already shared that we were seeing a rise in brands offering alternatives to cash to encourage purchase. As consumers tighten their belts, offering relevant experiences or services could be another strong way to demonstrate value to shoppers. Rather than reimbursing the consumer with cash, some brands are choosing to offer subscriptions to wellbeing and fitness apps upon proof of purchase. Others are creating loyalty programmes to reward customers for repeat purchase of their products with discounts and prizes.

Including multiple promotions within a single campaign is another approach some clients have taken to deliver increased value and engage shoppers. Using promotions against the product range not only gives consumers extra reasons to purchase your product but also help create or regain brand loyalty across the range, whilst managing promotion costs.

Adding value does not need to be solely aimed at the individual. With research finding that 77% of respondents felt more positively about brands making an effort to support society at the moment [4], giving back can be another way to reward purchases. That could be by helping your customers bring a moment of delight to far-away friends and family by giving away vouchers for a free mood-lifting gift. Or it could be by letting consumers choose to donate their cashback reward to a chosen charity.

As we enter move towards an uncertain future, we believe that understanding consumer priorities and appealing to shoppers’ sense of value hunting will be paramount for brands to influence purchase decisions.

Contact us today if you’d like to know more about promotion trends in the market or find out how we can help.

 

References

[1] savi Research
[2] NCH Research
[3] Kantar
[4] Twitter

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