£55bn spent on promotional marketing in 2013

According to new research from the Institute of Promotional Marketing (IPM), UK marketers spent almost £55 billion on promotional marketing during 2013, the majority of which went on price promotions.

Of the total figure, £40.4bn went on price discounts, while the remaining £14.4 was on ‘value-added’ promotions, where consumers are offered a reward, promotional gift or incentive rather than a price cut.

IPM's research suggests that this reliance on price discounts may drive short term sales, but it could also damage long term brand values.

Paul Godwin, head of insight at the IPM, explained: “The big question for brands and retailers has to be how best to strike a balance between price discounting and promotions that add value for everyone – brands, retailers and consumers.

“The economic downturn has inevitably meant that bargain hunting has become ingrained among Britons, with more than half buying brands only when on price promotion. Discounting has been seen as a cheap and dirty way of getting volume out of the door of the factory and the retailer. But the result is that promotional activity has changed from being a means to generate interest in brands to something that actively discourages brand purchase, unless there’s a deal.”

Paul also advised against over-use of any promotional technique, as it will reduce its effectiveness. There are already signs of a backlash from consumers who are becoming disillusioned with buying on price alone. “Increasing numbers of shoppers are looking for added value – they are becoming immune to discounting. After all, when everything is discounted, then nothing is,” added Paul.

The IPM will be using the study, and other research it has conducted into the potential negative effects of price promotions on long-term brand values, to get marketers at brand owners and retailers thinking about the optimum balance between price promotions and value-added promotions.

The report, The Size of the UK Promotional Marketing Industry 2013, is free to IPM members and £95 for non-members.

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