P&G are ready to give it a go – do you need to cut discounts?

From Toby--

When P&G do anything, the world of consumer goods takes a look. In our latest podcast Mike Anthony and I are talking a little bit about a new concept by P&G that they call irresistible superiority. Take a listen.

 

 

SHOW NOTES:

 

(01:11) Unpacking what P&G mean with ” irresistible superiority”

What P&G are saying is that they are trying to invest in the quality of their product, not necessarily taking their product upmarket but making sure they are delivering high quality products which are effectively irresistible therefor driving loyalty. But building beyond that to make sure the quality and execution of their advertising and their in-store messaging and communication is effectively trying to lock people into the brand.

 

(01:40) So what are the implications of this?

To quote John Moore from P&G, “To rely less on selling through promotions and instead invest more in the product itself, packaging, advertising and how it is presented in-store.” Isn’t that what marketing is all about?

 

(02.30) There is a choice

Discounts and promotions is something we’ve talked about often when we’re training, consulting and in our book, The Shopper Marketing Revolution. While many say discounts are inevitable here we have P&G saying we DO have a choice. If we market our brand more effectively to consumers and shoppers we can spend less and waste less on promotions.

 

(03.28) Why this is so important?

We spent so much money promoting brands. Somewhere around an estimated $310 billion a year are pumped into promotions. Those promotions have profound effects on our brands. We’ve seen how brands train shoppers into a price point, the supply chain is undermined constantly by changing price points, and we know that it kills profits. Of the $310billion, 70% is wasted on promotions that don’t work. (04.40)

 

What P&G are saying is… if our product is great, it delivers great value and we don’t have to be driving price as the main differentiater of this product.

 

(07:00) What can you do about discounting?

Listen to what Mike suggests that you as an individual, someone managing a brand, should do about discounting. We should set some sensible targets – if 70% is wasted on unsuccessful promotions can we not move to 60% for the next 12 months?

 

(09.29) Taking it on from there, Mike has suggestions of what we can do

We know that retailers are still going to want support, and we have to be able to come up with is an alternative narrative for the retailers that says, this is how I am going to support you in a way that is not quite as destructive to my profit and not quite as destructive to my brand

 

Whilst we are trying to find new ways of creating consumer and shopper value, which is exactly what irresistible superiority is about. We’ve also got to make sure we are still creating the narrative to take to retailers that demonstrates that we are still supporting them.

 

If you want to know more about creating that narrative then sign up on Shopper Marketing Experts, and gain access to more of our blog posts, podcasts and really engage with us on our forums – we would love to hear from you!

 

  • Steve Cleere

    Should we say it? The problem — the bottomless pit — of discounting is due mainly to two over-riding forces. The first are retailers who remain, despite an accumulation of data showing otherwise, that their shoppers respond to ‘discounting’ and that act is part of their ‘market position’. Every major U.S. retailers requires discounts, especially for new products (which makes very little sense as the consumer has no idea what the price should be -unless its a line extension..) and no one (not even P&G..) seem to able to move them on this.
    The second is the manufacturer who is experiences a volume decrease on a product line. Regardless of reason, the first answer of many CPG firms is to cut prices. Sometimes this will stem a downturn –but usually the price drop (or incentive) is accompanied by other promotional vehicles, like displays, advertisements or coupons that probably are the real generator of the volume rebound. It will be interesting to see how P&G’s effort plays out –but I wouldn’t expect much cooperation from their retail ‘partners’!!

    • Colleen Francis

      Wouldn’t it be great if retailers made their profit from selling to their shoppers effectively vs extorting money from their suppliers. If this were the case then more retailers would review their discounting strategies and focus on their shopper’s experience in store and on differentiating themselves properly.