Manufacturers Convince Non-Promo Buyers
Easier to win non-promo buyers than existing promo buyers
Major manufacturers as a whole have increased their promotional levels, regardless if it was an MNC, Local Giant or even Private Labels. In fact, there was faster growth observed among local players compared to MNCs. This increase in levels is likely due to manufacturers boosting promotional activation to win over shoppers and their increased reliance on promotions. Thus, using growth alone is insufficient to determine whether a promotional activation was a success. It needs to be incremental to the overall business.
An example to determine whether a promotion is incremental is to see if a manufacturer’s promotion successfully gained shoppers from another manufacturer. Delving into the switching behaviour of promotion purchasing, a manufacturer’s promotion is more likely to gain switching from non-promo rather than promotions. This indicates that whenever a manufacturer runs a promotion, it is more important to trigger awareness of the promotion. Notwithstanding however, having a more attractive promotion can still help gain from a rival’s promotion but most of the gains will still come from converting a shopper buying without promotions.
However, this in turn creates an issue of possible cannibalization/subsidization. Some manufacturers received no increment from their promotions as shoppers just switched from buying their products without promotion to buying their products still but on promotion. It is likely not a complete cannibalization/subsidy as it could also be argued that the promotions helped to retain the shoppers and not running the promotion would have made our shoppers lapse out of the brand. Thus, do we know if these shoppers were mostly subsidized or were they successfully retained using promotions?
