Active promotions drive sales

SHELTON, Conn. — Actively promoting an over-the-counter medicine outside of the retail box not only drives foot traffic, but it helps increase sales across households with a higher income and also more heavily indexed OTC product consumers, TABS Group CEO Kurt Jetta told attendees of a webcast covering a recent TABS Group Consumer Value Study. And while passively promoting at the shelf also pushes sales higher, the return on promotional investment is not nearly as robust.

The average shopper regularly takes advantage of two passive promotions — including everyday low price, store brand, bonus/value sizes. Comparatively, the average shopper regularly seeks out 2.2 active promotions — including limited-time offers, coupons or FSIs.

"There are a lot of shoppers out there actively searching for deals," Jetta noted. "[While] mainstream tactics are still the predominant ways that consumers search for value," he noted, almost half of the consumers who actively "shop for deals" are people who strongly agree that they will switch their outlet of choice to find a better value for the products they like.

That's important because those active deal seekers buy considerably more products as compared with shoppers who only seek value at the shelf, Jetta said. "There is a very strong relationship between the number of purchase occasions and the number of active deal search tactics that consumers use," he said. The heaviest active deal seekers represent 14% of the buyers and 19% of the purchases, "and they make twice as many purchases per buyer as the lowest [active deal seeker] group, which represents 22% of the buyers and 14% of the purchases."

"There is no more efficient path to appeal to heavy users than frequent and aggressive promotional support," Jetta noted. "The key is to structure promotions so that they are profitable."

Conversely, retailers who go to market almost exclusively with passive promotions, such as the everyday low price tactics employed by chains like Walmart or dollar store operators, may be missing out on the heaviest OTC buyers, according to Jetta. "[EDLP players] are capturing a lower share of the heavy-deal buyer, and the data is suggesting it's because they are not providing these active deal tactics," Jetta said. "Only one-third of those shoppers are content with EDLP or one other passive tactic. Two-thirds of them employ at least two active search strategies, meaning that EDLP alone will not maximize your quest to appeal to that heaviest buyer group."

Out of 1,000 consumers polled in March, 87.5% self-described as heavy OTC users and accounted for of OTC purchases.

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