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When the recession hit Britain everyone went into money-saving overdrive. Businesses looked for ways to cut costs and consumers started to tighten the purse-strings as they became increasingly price-sensitive.

Unsurprisingly price-led promotions became the weapon of choice. The question is, while such tactics may have grabbed the consumer’s attention and undoubtedly increased short-term sales, have companies compromised the brand in the process?

The main problem with price discounting or BOGOF promotions is they rarely generate anything other than short-term sales spikes. Indeed, our own research of 2,000 people showed that 87% would switch from their usual brand in favour of a BOGOF or price discount promotion (48% and 39% respectively).

The problem with such promotions is that consumers are notoriously promiscuous and fickle (more so than ever in times of recession) when it comes to impulse purchases, particularly those based on solely on price. Unless you can turn these trialists into loyal customers or engage the consumer on anything other than price, the chances of holding onto that customer is slim.
. With Asda banishing the bogof in favour of price-cutting and clear labeling, and the government weighing into the debate with suggestions of excessive food wastage; brands and retailers are increasingly looking for more effective alternatives.

When asked how the economic downturn has affected their shopping habits, the majority of consumers said they were more likely to look for price discounts (55%) or extra free promotions (54%). The challenge for brands then becomes how do you use sale promotions to engender long-term customer loyalty when all the consumer is seemingly looking for is the instant gratification of money-off offers.

The key to long-term success is to add value. If you look at some of the most successful promotions of late, such as Nescafe’s bean collection or the Andrex Puppy Collection, you see that it encourages repeat purchases and loyalty by offering genuinely valued and complementary rewards in return.

Whether it’s discounts from retail stores or a cuddly-toy, these types of promotion create that all important differentiation factor. This is ultimately what plays the largest role in brand perception and generating loyalty.

A great promotion should be able to help brands develop that all important long-term connection with their customers, and should support and complement all other aspects of their marketing activity, whether it’s above-the-line advertising, POP or a direct mail campaign. 

Instead of being blinded by short term sales, brands need to start using promotions as a way to convey their brand message and give real added value to their customers. Ultimately, brands need to get out of the trend of opting for the quick fix, or they risk causing long term damage to their brand value and reputation.