Should I promote more to stimulate more demand?
Promotions play a key role in the FMCG market allowing manufacturers to achieve short-term gains by attracting new buyers or expanding consumption amongst existing shoppers. But in the Post Covid-19 era should manufacturers be investing more in promotions to help make up for potential losses experienced during the epidemic? The answer to this question very much depends on the category.
Previous insights from Kantar Worldpanel (Pathto Recovery for FMCG post COVID-19) showed there are 4 types of category based on their performance during the peak of the outbreak and their recovery progression.
For ‘Growth’ categories, such as hand wash and disinfectant, there is less of a need to promote because demand has been stimulated as a result of the virus itself. 95% of these categories have reduced promotion levels in the 6 weeks to 17th April 2020 compared to the equivalent period last year.
However, for U-Shape categories, such as hair care and skincare, more than half of them are increasing volume on deal levels in order to stimulate more demand and help accelerate the recovery.
Knowing whether to promote more or less is just the first question to address.Manufacturers will also need to know which promotions will drive the most incrementality and bring back the reduced volume that resulted from the epidemic.
Kantar Worldpanel is uniquely placed to help manufacturers plan a promotion strategy based on how consumers respond to different type of promotions based on the product, pack size, promotion mechanic, channel and length of promotion
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Managing Director, Great China