Speak My Language: Price promotions, but many are irrelevant to the recipient.

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GI Insight’s latest research has found that as retailers seek to hang on to their customers during the recession there has been a major upswing in price promotions, but many are irrelevant to the recipient.

The survey found that 57% of UK consumers have noticed a very significant increase in the price promotions and special offers they are receiving through direct marketing. However, 68% say the vast majority of these offers are totally irrelevant to them. In other words, over two thirds of the effort, creativity and budget being devoted to special offer campaigns is being utterly wasted, because it is incentivising purchases that the recipient will never make.

In the midst of the one of the deepest recessions of recent decades, consumers are becoming far more price conscious. Some 35% of consumers say that, in the last year, they have switched downmarket to a ‘value’ supermarket for a significant portion of their food shopping. The equivalent proportion amongst clothes shoppers was even higher, at 39%.

Although this may not mean that their total supermarket, or clothes shopping, spend has switched, it still represents a very significant loss of revenue for the premium providers and equally significant gain form value outlets.

Andy Wood, Managing Director, GI Insight, comments: “One key way in which both parties have been looking to keep or win custom is by ramping up their use of incentives and price-promotions, in the form of coupons (money off a particular product) and vouchers (discount when spend goes over a certain amount). Premium supermarkets have been creating special offers to return a level of value to existing customers and keep them engaged; value supermarkets have been using price promotions to try and attract even more customers away from the premium providers, even if it is just for a proportion of their spend.

“However, the current flurry of activity around discount and price promotions may be wasting a considerable proportion of its potential. Evidently a third of retail marketers are getting it right, taking advantage of the data they hold, or have gathered, to personalise their coupon or voucher activity to the recipient. They have recognised and grasped today’s ability to print personalised offers and booklets at a very economic cost.

“The hike in special offer activity is creating a much more crowded and competitive market for the consumer’s attention. Those who make the most use of the ability to vary and personalise text and images to the recipient are likely to also be those whose campaigns stand out in the marketplace, and whose redemption rates soar.”

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Note for editors:

Methodology
Over 1,000 consumers were interviewed during May 2009, regarding their supermarket and clothes shopping habits, and how they had changed in the last year. The survey sample was nationally representative, by gender, age, region and social class.

About GI Insight
GI Insight specialise in database marketing and loyalty schemes, having created and managed more retail loyalty programmes than anyone else in the UK.

We help companies reliably increase profitability by:

* Getting more new customers (acquisition)
* Getting existing customers to (retention):
* Spend more often
* Spend more per transaction

We offer a full range of database marketing services including consultancy, database design/build/host, data capture, analysis, segmentation, profiling, campaign execution and measurement, available as a whole or on a ‘pick and mix’ basis.

For more information, please visit www.gi-solutionsgroup.com

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