Promotion effect

The single most important factor for having a successful FMCG promotion is ‘Speed of consumption’. By all means it is vital that products move out of stores quickly, but it is also paramount that products move out of home at high speed as well. When a product is on promotion, it is your friend in driving traffic and sales. When the product moves home, it is your ‘enemy’, as it behaves like a repulsion for a revisit and repurchase. The longer the ‘tail-effect’ of a blockbuster promotion lasts, the worse it is is for the total category, and for the retailer’s share. That is the reason why it matters what products are selected for promotion.

A-BRANDS
A-brands are top of mind and mostly liked in a given category. Yes, they can also be mega brands, but that is just an additional cherry in the pie. These products are less elastic, and are stronger. They do sell faster and and do secure a more robust bottom line for the retailers. Not only do these products have a higher preference ‘in market’, but they do also have a higher preference ‘at home’. Based on that, the home inventory is faster empty, making it needful for yet another trip to the store to purchase more. A-brands are often opened (for consumption) within a few hours after getting home. A-brands hence lead to net positive promotions, as it brings the category back onto baseline at a fast pace.

‘Speed of Consumption’ is tracked through a ‘Household Panel’ (e.g. from GfK), making it an excellent tool to strengthen your sell in story to the retailers, and better yet to understand your shoppers and consumers.

B-BRANDS
B-brands are the weaker category challengers. These products need promotion, lower prices and retail-good-will to survive. They have less acceptance among consumers, and are seldom in the evoked set of desired products. According to household data, these products are not opened for consumption at the same speed as A-brands. A second trivia is that every time they are consumed, the amount is less. The net effect B-brands on promotion is often negative, as they do not bring the shoppers back into the category as fast as A-brands for repurchase.

The isolated category effect of running promotions for A-brands is always bigger and better than for B-brands.
At the greater arena, also the retailers’ overall share grow more when highlighting A-brands to B-brands. The simplest analysis to conduct, is a correlation analysis for the total category, and the sales for respective products. You should also lift it up a few notches, and evaluate the shares of the retailers. By all means pricing is vital, and you could (and should) run a few of them to select the most optimal promoted items.

A-BRANDS GET CATEGORY BACK ON TRACK FASTER
We conducted a 10 year study comparing A-brands and B-brands post promotion. The conclusion was clear; favorite brands get the whole category back on track faster. The reason was very simple. A-brands were opened faster at home; hence created a need for faster repurchase due to out of stock. In average B-brands got back to category baseline after four weeks, with a net negative effect. A-brands got back to average sales after only one week, with net positive effect.