If you work in marketing (whether of the brand, category, shopper or trade variety) you need to be worried. If you are a VP or director of a consumer goods manufacturer, the same goes for you. Your brands are under a sustained assault, and much of the damage is self-inflicted. Discounts and deals are killing your brand. And don’t look at your sales team and blame them. Don’t blame the retailer, either. Its your brand, it’s your future. It’s time to take some action. The reason? A simple display in a store. A display, that for the first time, made me think “WTF!”
I’ve written about the overuse of discounts at retail before, but make no apologies for coming around at this one again. The reason? A display in a Tesco store I spied this weekend, offering a number of brands at ‘better than half price’. Less than half price? Seriously? Where is this going to stop? Discounting at retail is out of control, and it is high time that manufacturers started to take this seriously.
Discounts aren’t all bad…
The overuse of discounts at retail is nothing new: and in the last few years it seems to have got worse, probably driven by an increase in competition at retail in many markets with the growth of online and discounters in particular. And discounts and deals are legitimate strategies, when used with care and restraint. (if you want to know more about this – check out this complimentary webinar!) At the same time, too much discounting is destructive for many reasons. Using discounts to create value is a fine balance, and sometimes it’s hard to judge where a line has been crossed. But in this case, it isn’t hard. Offering an established brand for less than half price is too far.
Discount Madness: Time for change
I can’t think of a good reason why this should be OK. I can’t imagine a situation where anyone in the manufacturer team said “Yes, I understand. 50% off simply isn’t quite enough to entice shoppers to try my brand.” If it takes a discount of over 50% to attract shoppers to your brand, then your brand has major problems!
And yes, I do understand that this might not have been sanctioned by the manufacturer – that the retailer may have chosen to conduct this ‘brandocide’ unilaterally. But – well – what is the manufacturer doing about it? If the entire supplier team – brand manager, shopper marketer, category manager, key account manager, sales director, marketing director and CEO isn’t having sleepless nights, they really should be ashamed. Its too easy to blame the retailer, and OK – maybe it was their doing. But it is your brand that is being devalued.
Addressing the discount problem – It’s your responsibility
Marketers. This isn’t a shopper thing. This isn’t a sales thing. This is a brand thing. This is your brand, and it is being devalued, massively. What are shoppers supposed to think? What will happen to their perception of your brand? What will happen to their future purchase patterns? Think about it. It isn’t pretty is it? Now is the time for commercial teams – marketing, trade marketing, shopper marketing, category teams and customer managers – to come together and create meaningful integrated strategies to respond to the existential threat your brands are facing.
Brand managers. Stop worrying about your web site, mobile app or Facebook likes. This is far more important. This isn’t something that can be just left to someone else to resolve, or to be swept under the ‘it’s a sales problem’ carpet. This is your brand – and its being destroyed. Shopper marketers and category managers: what can you do to reduce this? What else could the retailer be doing to win the shopper battle. If your customer is this desperate, then there is an opportunity – they may well listen to your solutions, no matter how radical. And sales teams: come on! Manage your customers! Your job is to stop this sort of thing happening, not, heaven’s forbid, encouraging it.
Taking the first steps to addressing discount madness
I recognize that the solution isn’t simple: that changing the behavior of desperate retailers (and delivering short term targets) is a tough road – but it is possible. It takes commitment and focus, but we’ve successfully worked with many clients who have managed to change their marketing mix, to reduce the focus on promotions, to reduce total trade spend, and to make that spend much more effective.
And if you are tempted to think that discounts are just part of doing business, and that retailers will be retailers, and that there is little you can do about it – think again. If “less than half price” isn’t a bridge too far, then what is? 60% off? 70%? 80%? At what point will you say: “enough is enough?“
If, like me, you’re concerned that your in-store efforts are over-reliant on discounts, or that your trade spend is out of hand, or that you’re not convinced you have a coherent strategy to manage the increased drive for discounts, contact me. Let’s talk through what can be done about this, before its too late. And as a first step, come join the Shopper Marketing Experts webinar to learn more.