Ad Age

1. NOVEMBER 24, 2008
CRAIN’S INTERNATIONAL NEWSPAPER OF MARKETING ADAGE.COM
P
rice discounting is seemingly the
one sure thing in an economic
downturn, but research by WPP
Group shopper-marketing agency
OgilvyAction indicates it's still not as
effective a sales tool as that old stal-
wart: in-store displays.
Research OgilvyAction conducted
with more than 6,000 shoppers across
multiple channels in the U.S. in Febru-
ary and March indicates far more im-
pulse purchases are driven by tactics
like those low-tech cardboard displays
found at the end of aisles rather than
temporary price reductions.
More recent evidence
And while that survey came before the
economy turned much worse in Sep-
tember, research in the past month by
the agency for a snack-food brand at
convenience stores had similar find-
ings in fact, display drove nearly twice
the number of impulse purchases as
price reductions.
Specifically, OgilvyAction's re-
search from the spring indicates
that 29% of U.S. shoppers impul-
sively buy from categories they did-
n't plan to when they entered the
store. Of that group, 24% said they
were influenced by secondary dis-
plays (away from the product's
usual aisle), 18% by in-store
demonstrations, and only 17% by
price promotion.
The study also found 39% of U.S.
shoppers have a category in mind but
pick their brand in store, and of those,
31% were influenced by in-store
demonstrations — more than the 28%
by price promotion and the 27% in-
fluenced by some other form of con-
sumer promotion.
In each case, however, more than twice
as many consumers said they bought
impulsively because of display or some
other form of promotion as said they
did so because of price.
Hard to resist
The convenience-store study found an
even larger share of impulse purchases
were driven by display — 49% in the
case of the snack brand in question —
than the broader study taken months
earlier, but no additional lift for price-
driven decisions.
IN-STOREDISPLAYSAREMORE
EFFECTIVETHANPRICECUTSOgilvyAction Finds More Shoppers Spurred by Low-tech Stands, Demonstrations
By Jack Neff
Rick Roth

2. Reprinted with permission from the November 24, 2008 issue of Advertising Age, www.adage.com ©2008 by Crain Communications Inc.
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"We know price promotion will al-
ways be in the picture for any shop-
per," said Jeff Froud, senior strategic
planner with OgilvyAction. "They
will always say they don't want to feel
like they're getting ripped off." But he
said the research also indicates displays
or other in-store promotions without
price reductions can work.
Realistically, the two don't often hap-
pen in isolation. Especially in a reces-
sion, retailers are likely to demand
funds for a temporary price reduction
in order to authorize a display, Mr.
Froud said. He just hopes manufactur-
ers can use the data to try to convince
retailers that both sides can fare better
without as much price promotion.
OgilvyAction CEO Rick Roth said
marketers can still convey value in
stores without doing temporary price
reductions, pointing to Kellogg's pro-
gram with Wal-Mart Stores to high-
light the 50¢ cost of eating breakfast
at home, or a program Sara Lee began
recently with a promotional tie-in to
Disney's "High School Musical 3,"
which had a secondary message about
buying bread and lunchmeat as "a
sensible meal solution" compared to
eating out.
Marketing-mix analytics long have
shown that display alone can drive
sales without price cuts, though ana-
lysts knew of no studies comparing the
total return from price reductions
alone to display alone.
Mike Hess, director-global research
and consumer insights for Omnicom
Group's OMD, hopes growing use of
Nielsen's PRISM system for measur-
ing the impact of various in-store
tactics will ultimately help answer
such questions.
Price cuts may have hidden benefits
But a recent OMD survey also sug-
gests price promotion resonates more
with consumers in a recession, he said,
as consumers said they plan to buy as
often in everyday or staple categories
but will look to trade down. "One way
to stop them from trading down is a
temporary price reduction," he said.
At the same time, the research showed
that in more expensive or luxury cat-
egories such as jewelry and vacations,
people are more inclined to do without
rather than trade down, suggesting
price promotion may be of little value.
"Price promotion is almost always the
worst investment you can make in the
long run," said Sunil Garga, proprietor
of the analytics firm Mphasize, Nor-
walk, Conn. But he still expects more
of it in the months ahead as marketers
deal back recent price hikes in the face
of moderating commodity costs and
more frugal consumers.
Sunil Garga