Why do consumers respond to Promotions?

I would like to dedicate this post to a research published by Pierre Chandon, Brian Wansink and Gilles Laurant in the October 2000 Journal of Marketing, which helped demonstrate empirically that monetary savings cannot fully explain why consumers respond to promotions.

Think about yourself for example when strolling through the alleys of a supermarket, how many times have you been remembered of the need of a certain product when seeing it on promotion in a secondary point-of-sale? As you can see in this example, the price reduction factor is of secondary importance, and convenience is the main trigger.

There are basically 2 main motivators/benefits for promotions, the utilitarian benefits, which are those benefits that help consumers maximize their acquisition and enhance the efficiency of the shopping experience, and the hedonic benefits which are more related to entertainment and exploration benefits.

Here a short explanation and some “insights” for understanding every benefit.

Utilitarian benefits:

• Savings: Lowering the product unit price or the price per gram (or liter or unit) by offering a cut-off. Offering more product for free or providing rebates on subsequent purchases.

“A promotion is like new money in your pocketthat you can use to buy something else”

• Quality: It’s about increasing value-for-money, relaxing household budgets and allowing consumers to upgrade to a better product.

“I normally do not buy packaged salads, they are too expensive.
But I buy them when they cut the price”

• Convenience: Promotions that help improve shoping efficiency by reducing search costs and decision costs.

“Sometimes I remermber that I need a product when I see it on sale”

“I buy the brand on deal cause I don’t know which one to buy”

• Value Expression: Some shoppers are motivated by personal or moral values. For instance for being a “responsible shopper” or smart shopper and earn social recognition.

“I sometimes feel guilty when I could have used a coupon but I didn’t”

Hedonic benefits:

• Exploration: Because promotions are constantly changing, they can attract consumer attention and fulfill the human need for exploration, variety and information.

“when I buy I look at sales promotions to get new ideas and find variety”

• Entertainment: Promotions can be FUN! For instance through contests, sweepstakes, free gifts, etc

“I read the contests on the cereal boxes every morning, they are fun!”

What are the implications?

Implications are that there is no perfect “recipe” of benefits that will allow you to make promotions work in every single case, but rather that aligning the benefits with the promotion objectives, the in-store placement of the promotion and the brand positioning and target group will help you maximize its effectiveness.

Also, it implies that marketers can increase promotion effectiveness with non-monetary promotions. For example think of combining an on-pack coupon with a contest or a multipack refund with an in-store display that emphasizes new product uses.

Finally, rethink the goals of your sales promotions. Promotions are not only to be seen as a mere price discrimination tool and short term tactical weapon, but rather a tool to deliver higher customer value. This also implies that by using “every-day-low-price” policies you are alienating the hedonic deal-prone shopper!

Posted By Ignacio Molins