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3.2.2011 Promotions lose favour

Major brand owners like P&G, General Mills and Kimberly-Clark are hoping to reduce their reliance on promotions, a marketing tool that is seemingly losing effectiveness among shoppers. According to research firm SymphonyIRI, approximately 30% of products sold in 70% of consumer packaged goods categories last year offered a deal, discount or other incentive. The first of these figures had climbed from 60% four years ago, while two-thirds of sectors witnessed an increase in such activities in 2010. However, the average uptick in volume sales delivered by each initiative dropped in 57% of segments, SymphonyIRI said.

"We do believe there's a level of promotion fatigue out there," Susan Viamari, editor of the company's Times and Trends reports. "Promotion has been very high in the industry over the past couple of years, even though we did see a moderation in the growth. CPG manufacturers need to evaluate everyday pricing strategies."

Procter & Gamble has maintained its marketing outlay at 10% of annual sales, but expects a more coordinated approach will yield stronger returns than short term solutions. "We're seeing somewhat of a deceleration of temporary price reductions or discounting," said Robert McDonald, P&G's ceo. "We measure marketing ROI on marketing spend. And our marketing effectiveness is at all-time high levels. Part of the reason for that is we're doing a better job operating as one company." He added: "When we operate as one company and take advantage of the full portfolio of brands that we have, it results in greater growth and it results in much better efficiency of our marketing spend."

B.L. 3.2.2011