Consumers are looking for deals. They are clipping coupons at an increasing rate. So why are retailers not getting the same sales lift they once did?

“We do believe there’s a level of promotion fatigue out there,” Susan Viamari, editor of SymphonyIRI’s Times and Trends, told Ad Age.”Promotion has been very high in the industry over the past couple of years, even though we did see a moderation in the growth. CPG manufacturers need to evaluate everyday pricing strategies.”

Sales lift per promotion has fallen, and everyday pricing may be one of the reasons. But a bigger factor is untargeted, mass discounts.  Marketers need to better tailor their shopper messages, employ digital capabilities, and rely less on broad programs like TPRs. To offset promotion fatigue with smart tailoring we need to ask a few questions:

1. What kinds of tactics cause this fatigue? FSIs, TPRs, displays and features are mentioned because they are legacy spray and pray vehicles. But digital offers used excessively are also culprits, according to Gregg Ambach of Analytic Partners. Mass email in particular desensitizes shoppers. We’ve found lowering frequency of delivery, carefully selecting which offers to include, and shorter expiration periods all improve response.

2. What kinds of shoppers experience this fatigue? Mostly, those who are bombarded with irrelevancy. Analytics applied to individual purchase history, mass response and cross-category patterns grow incremental lift and improve shoppers’ self-reported satisfaction. Furthermore, analytics applied to individual promotion history tells us which shoppers are the deal enthusiasts who don’t generate incremental lift.

3. What kinds of offers contribute to fatigue? Often, it’s the glaring sameness of discounts. Instead, providing brand news, new usage occasions, seasonal relevance, and multi-product solutions all contribute to brand utility and equity. So does recognizing loyal shoppers or brand buyers apart from average shoppers with a thank you message and tailored offers.

In mass retail/CPG environments, the data is there for us to determine what works to drive promotion effectiveness. But we don’t get much time. As stated by Utpal Dholakia, a professor at Rice University, “the effects of promotions happen in the short term, and long term they have very little effect.”

Categories: Analytics, Pre-store, Promotions | Tags: , , , | Leave a comment

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