Supplier funded promotions are the most efficient and cost effective promotional mechanism, according to new research by Nielsen; commissioned by retail marketing programme specialist, TCC.
Nielsen has undertaken a year-long research programme to identify the most effective promotions over this period and the research looked at the comparative merits of Temporary Price Reductions (TPRs), gondola promotions, three for two offers and supplier funded promotions, among other initiatives.
Deep discounting has become ever more present and competitive across the retail board but the research indicates short term promotions offer little more than a short term hit, the research company said. Long term supplier funded promotions were shown to return an impressive 46% FMCG sales increase over 16 week periods, however.
Research at a glance:
- TPRs, gondolas and three for two offers are expensive to run in the short term
- Promotions need to be longer term to return value
- Short term promotions don’t build loyalty
- Supplier funded promotions encourage return footfall and spend
- Research across a number of different brands showed consistently high returns
- Products were tested from Unilever, Kraft, Heinz and Danone
- Supplier funded promotions showed 46% increase in FMCG sales
- Supplier funded promotions outperformed three for two offers by over 10%
- Supplier funded promotions demonstrate a positive return on investment
- Independent research was conducted by Nielsen and Custom Analytics
David Ringer, general manager for UK & Ireland at TCC, said: “This research proves what many in the industry have been saying for a long time. Loyalty is key and short-term promotions do not deliver it and do not provide good value for money for the retailer. TCC will continue to work with clients not just in Europe but globally to devise and deliver innovative programmes that we can prove provide a significant return on investment.”