One way to tell the economy is recovering is the amount and variety of ads for brand-name products.
But the uptick shows some changes, too, in the way marketers promote their products.
Aggressive, indulgent products like Hummers are out, while “better for you” is in. According to one researcher,[1] ad spends by food marketers increased in the first quarter of 2010, including Hershey (up a whopping 81.2%), H. J. Heinz (up 45.2%), ConAgra Foods (22.9%), General Mills (15.5%), Kraft Foods (17.8%) and J. M. Smucker (12.4%). The kinds of products being flogged also varied, with Sabra brand refrigerated dips and spreads including over a dozen varieties of hummus.[2]PepsiCo now generates $10bn of its annual $43.2bn sales from “better-for-you” products like Aquafina water, Near East couscous, Quaker Oats, Tropicana & Naked juices, Stacy’s pita chips and True North nuts.
[1] Source: Kantar Media research division of WPP.
[2] Sabra part of a joint venture between the Strauss Group and the Frito-Lay North America division of PepsiCo.
Even before their disastrous Super Bowl ad (see below) that exploits Tibet even as it pretends to lament its problems, we were saying the online coupon service was a bust for many businesses who have uncritically rushed to use it.
Same as we were among the first de-adapters of Twitter for business applications. Now new research is showing we were right about that, too.
But I digress.
New data[1] shows that promotions overall no longer provide the significant increase in sales (known as “lift”) that they have traditionally for consumer product manufacturers and retailers. Despite a second straight year of increases in products sold on promotion (30%), the average volume “lift” declined. Even as coupon redemption rates reached record levels in 2010[2], the pace of redemption fell 15% (from $2bn to $1.7bn) as the year went on.
Nearly three-quarters (70%) of product categories employ promotional support, yet lift declined in nearly 60% of them. Walmart is one of the biggest promotional losers, and has backed away from its policy of “deep rollbacks” to one of “everyday low pricing” after the strategy generated poor results, and those associated with it left the company (jumped or were pushed). Reasons for the drop-off in lift include “promotion fatigue” (bad news for Groupon and its imitators), a continuing reluctance by financially-strapped consumers to stock up (even if something is attractively-priced), and the increase in unsolicited digital coupons and promotions.
Even as Groupon hurtles forward to an eagerly-anticipated IPO, of 150 businesses who tried Groupon during a survey from 2009-2010[3], 32% found it unprofitable. More alarming for those thinking of going with Groupon: those who joined later turned out to be less-likely to find it profitable.
Yikes.
Restaurants have been especially outspoken in their disgust with Groupon: over 40% of restaurants found it not profitable. And the Groupon customers who did use the offers usually spent nothing beyond the promotion, didn’t leave a tip, and never returned. So much for using promotions to build a customer base.
And for marketers in love with Facebook, Twitter and other social media: an increase in “chatter” last year about deals and promotions on various commercial Facebook sites and with multiple “tweets” did not translate into increased sales volume.
The marketer’s dream of a one-to-one relationship with a receptive consumer remains just that: a dream.
While the transaction has been described as a sale to handle the inexperience most Americans have with the concept of food licensing, Hormel’s recent “purchase” of the Shedd’s Spread Country Crock brand from Unilever is really only a transfer of the branded chilled side-dish business that will allow Hormel to continue the line under license. Like Tyson and Smithfield, the company best-known for its meats is looking to diversify away from meal “components” to meal “solutions,” and has been running ads reminding consumers of its Compleats and Dinty Moore lines. Restaurants and celebrity chefs have dominated recent food licensing news, but this shows the elasticity of the licensing concept across the food channel.
Imported Brewskies Not AS Popular
According to new research,[1] the American love affair with imported beer has hit the skids: 2007/2008 sales of imports fell 5.4% (to 386MM cases), while domestic brews declined only 1.6%. Imported beers sales increased 13% from 2004 to 2009. The economic turndown has hit brewers around the world, but so-called “craft” beers from micro-breweries have grabbed some of the premium market with overall share rising from 6.2% in 2006 to 7.5% in 2008. Additionally, beer drinkers have drifted to newer buzz concoctions, including adding alcohol to energy drinks.
Men & HBA Combine For Grooming $$$
All indications are that personal grooming is an area where private national brands can kick private label down the street, but the conventional wisdom was that was for women’s and kids’ products. San Antonio, TX Retailer H-E-B’s new Men’s Zone is changing that with over 500 products for the male shopper, including items to de-stress skin, fight puffy eyes, soothe fretful scalps, and even combat wrinkles, all while making them smell good. TVs broadcasting soccer, car racing, basketball and other sports are there to encourage dallying, and customers seem to like being able to find all their HBA needs in one location inside the store. The industry has topped $4bn in annual sales within the U.S. and $43bn globally (not ALL of it in France), with an annual global growth rate of 8%.[2]Proctor & Gamble is behind the Men’s Zone, and chose San Antonio because of its large Latino population, one that spends more money on general grooming than other groups.
Want to learn more about leveraging restaurant brands to retail? Purchase the webinar we did with QSR Magazine called “Taking Your Brand to Retail Shelves” available for $249 by clicking here.
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