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UK marketers spent £55bn on promotions in 2013

UK marketers spent £55bn on promotional marketing in 2013

UK marketers spent almost £55 billion on promotional marketing during 2013, the majority of which went on price promotions, according to new research from the Institute of Promotional Marketing (IPM).   

Of the total figure, £40.4bn went on price discounts, while the remaining £14.4bn was on ‘value-added’ promotions, where consumers are offered a reward or incentive to do something, rather than a price cut.   

Paul Godwin, head of insight at the IPM, says: “The big question for brands and retailers has to be how best to strike a balance between price discounting and promotions that adds value for everyone – brands, retailers and consumers.”   

Relying too heavily on price discounts may drive short term sales, but it also damages long term brand values, IPM research suggests.   

Godwin points out that too many price promotions have trained consumers to be deal hunters. He says: “The economic downturn has inevitably meant that bargain hunting has become ingrained among Britons, with more than half buying brands only when on price promotion. Discounting has been seen as a cheap and dirty way of getting volume out of the door of the factory and the retailer. But the result is that promotional activity has changed from being a means to generate interest in brands to something that actively discourages brand purchase, unless there’s a deal.”   

However, over-use of any promotional technique will reduce its effectiveness, Godwin adds, stressing that there are already signs of a backlash from consumers who are becoming disillusioned with buying on price alone. “Increasing numbers of shoppers are looking for added value – they are becoming immune to discounting. After all, when everything is discounted, then nothing is.”   

The IPM will be using the study, and other research it has conducted into the potential negative effects of price promotions on long-term brand values, to get marketers at brand owners and retailers thinking about the optimum balance between price promotions and value-added promotions.   

The report, The Size of the UK Promotional MarketingIndustry 2013, is free to IPM members who can download it from the IPM Insights section. They will need to log in.

Non-members can buy the report for £95. Anyone who wants to purchase a copy should email Insights@theipm.org.uk or call 020 7291 7730.