Magazine article Marketing

Sales Promotion: Festive Sales Promotion

Magazine article Marketing

Sales Promotion: Festive Sales Promotion

Article excerpt

With consumers cutting back, sales promotion has never been more important than it is this Christmas. But are the early launches simply covering up a lack of creativity and originality, asks Amy Golding.

Every year, consumers complain that Christmas advertising starts too early, but far fewer complain about the festive discounts on offer. This year, retailers have been falling over themselves to entice cautious consumers into stores. From big-ticket items such as electronics to food and drink essentials, brands and retailers alike have been battling for a share of Christmas spending for months by dressing up price discounting in festive wrapping. However, such early promotions have led some experts to question whether 2010's Christmas offers are lacking in creativity.

Not surprisingly, the big supermarkets were among the first retailers to announce the beginning of their seasonal sales promotions.

Morrisons launched its Christmas loyalty offer in October, with an initiative that requires shoppers to spend at least pounds 40 in five of the six weeks running up to Christmas. In return, they receive a pounds 25 voucher to use when they spend pounds 40 or more in-store before 1 January. Customers will also receive a pounds 5 voucher valid for January purchases to encourage them back into stores at a time when government cuts and an increase in the VAT rate may stifle spending.

Asda is running a similar scheme. Every customer who spends pounds 40 receives a book of money-off vouchers worth pounds 40 to use in the run-up to Christmas on a range of own-label and branded products.

Tesco also unveiled its Christmas campaign in October. Activity includes about pounds 800m-worth of price cuts and promotions, as well as the Big Exchange. For this initiative, Clubcard-holders can exchange Clubcard vouchers for reward tokens, at double the face value, to spend in selected departments in-store or online.

Even Marks & Spencer is running buy-one-get-one free deals on products such as mince pies.

Barbara Holgate, managing director of sales promotion agency The Big Kick, which works with brands such as Quality Street, says: 'Dealing and discounting in-store is at a higher level than ever, which will become even more evident this Christmas.'

A record 37% of grocery sales by value were on promotion in September, according to Nielsen, beating last year's peak of 36% in November. 'I don't think that Christmas 2010 will be the year for creativity and innovation in sales promotion,' adds Holgate. 'Brands and retailers won't want to move away from discounting while attempting to attract shoppers in hard times.'

Jenny Williams, associate planning director at sales promotion agency The Marketing Store, which works with electronics brand Canon, agrees that many retailers will be hesitant to use sales promotions that do not heavily involve price discounting. 'Against this hugely competitive backdrop, it is extremely difficult for manufacturers to achieve standout,' she says. 'To create real cut-through often demands heavy discounting, heavily advertised.'

Ahead of the game

One of the first examples of such activity to break this year was the launch of Sony's offer to refund the VAT on a range of products, which is being backed by a major ad campaign. The strategy is based on research by digital agency Crayon London, which highlighted consumer concern over the rise in VAT to be implemented in January.

Gemma Lovelock, managing director at TLC Marketing, which has previously run sales promotion campaigns for retailers including Boots, says: 'VAT has been a key discussion point this year, with an increase in the rate set to put a squeeze on consumers. This step up in promotional activity in the run-up to Christmas seems to be more geared to encouraging consumers to spend in the New Year. Major retailers and brands are making a real effort to promote loyalty and reward consumers with vouchers for spending in January. …

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