All good things must come to an end, and that end is near for what we fondly know as ‘the promotion’… well, not completely come to an end but like big hair, and 80s fashion, ‘the promotion’ needs a well-deserved update.
According to Grey and G2’s Eye on Asia – Retail study, 62% of Asian shoppers do not buy products on promotion. Even more astounding is that *two-fifths of the 38% who DO buy a product on promotion say they were NOT influenced by that promotion, which means promotion or not, they would have bought the product anyway. This means existing promotions are likely:
1) rewarding shoppers who already have a brand as a part of their repertoire
2) rewarding shoppers already loyal to a brand
3) not as effective for acquisition
So if an in-store strategy is largely based around getting new acquisitions, chances are the brand is actually “acquiring” existing customers, not new ones.
There is no simple solution for this. Asia is richly diverse, and shopping habits reflect this diversity. What we CAN say is, maybe it is time to relook at how we strategise and design retail promotions.
First, let us look at the context. How crowded is the market’s retail scene? Is there a mall, supermarket or pharmacy in every corner? And how frequently does the market have sales or promotions – once in a blue moon, or consistently throughout the year? Case in point, a country like Malaysia is always “on sale” – no matter where you go there is bound to be some sort of promotion. As a result, Malaysian shoppers have come to expect promotions, in fact it is not uncommon for them to walk into a store and on autopilot, ask what the discount is. “Why buy when there isn’t any promotion? If this supermarket doesn’t have a promotion, I go to the next one. There will always be a supermarket with a promotion,” says the Malaysian shopper. By understanding how exposed the target shopper is, brands can help identify what level of sophistication and engagement will be best for a promotion.
Second, identify what type of shopper is predominant in the market. Grey and G2’s Eye on Asia – Retail study was able to segment four distinct Asian shopper types, defined by their shopping personalities; Loyal Listers, Whim Indulgers, Engaged Info Seekers, and Passive Value Fans. As the names suggest, Loyal Listers are loyal to their shopping list. They feel shopping is about buying what is necessary (hence the list) so they do not spend much time shopping. A large majority of Indian shoppers (61%) fall under this category. This is indicative of the retail scene in India which is largely dominated by provisions.
Whim Indulgers, on the other hand, are Asia’s “shopaholics”. Shopping to them is an adventure. They buy more than they intended to and hence are less planned in their shopping. 44% of Japanese shoppers fall under this category, most likely due to higher income levels combined with ongoing excitement prevalent in the Japanese retail scene.
Engaged Info Seekers look out for as much information as possible (both in and out of the store) to help them make their purchase decisions. Passive Value Fans do not find shopping as fun – it is more monotonous and functional to them and they are always on the lookout for the lowest price. Majority of Malaysian shoppers fall under these last two categories (34% and 32% respectively), which reflect how immune Malaysians have become to the average promotion. Understanding the shopper types in the market, and – on a more granular level – the predominant shopper types within the product category, will help tailor promotions to answer each segment’s specific needs.
This brings us to the final point – understanding how the nature of the category impacts the type and frequency of promotions. For example, for health supplements and medical treatments, too many promotions can harm brand equity. Across channels in China, India and Malaysia, over 40% of shoppers say if a well-known brand is often on promotion, they tend to doubt its quality. In a nutshell, for this scenario, the more premium or perceived expensive categories risk eroding their brand image if they are constantly on promotion.
Clearly, developing promotions is not as straightforward as it sounds, especially if one wants to ensure brand equity is not eroded. The retail situation in each market, predominant shopper types and category dynamics, have a huge impact on a promotion’s level of effectiveness. Interestingly, though there is no one hard and fast rule declaring which type of promotion will ultimately succeed in Asia, Grey and G2’s Eye on Asia – Retail study did discover one commonality among the Asian markets surveyed – when asked what type of promotion was attractive to them, Asian shoppers, regardless of category or channel, consistently and resoundingly ranked “contests” as least attractive.*
In conclusion, while the average promotion could do with a makeover, one thing is for certain – enough with the slogan writings! Asian shoppers would really rather do without them.
*Note: Survey did not break down types of contests.
Contributed by Remona Duquesne, Group Planning Director, Grey Group Malaysia