Are low prices more popular than promotions?

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By: Wise Marketer Staff |

Posted on January 23, 2004

The food industry research firm, IGD, recently produced a study of consumer opinions on every day low pricing (EDLP) and other promotional techniques, revealing that 60% of the UK's shoppers prefer EDLP in their supermarket instead of purely promotional strategies.

The survey behind IGD's Shopper Insight Loyalty and Pricing report, published last month, asked consumers if they preferred a store that offered consistently low prices and limited or no promotions, or one that offered a variety of different promotions. Some 60% said they preferred low prices while the remaining 40% said they preferred a variety of promotions.

When IGD examined the reasons behind these preferences, more than half of those preferring EDLP did so because they shopped according to a budget. The remaining EDLP fans preferred stores offering low prices either because they felt that promotions were generally not relevant to them or that supermarkets that focused on promotions might have higher prices on other items.

EDLP's disadvantage
However, one disadvantage of the pure EDLP strategy is that shoppers miss out on a level of in-store excitement associated with promotions. As one shopper said: "If it's low price all the time, eventually that is what you expect to pay, and you don't think you are getting a bargain." So, although the consumer may get lower prices than they would in many promotion-based stores, the perceived value of the EDLP strategy may still need to be reinforced in the minds of consumers.

Buy one get one free?
But nearly 23% of shoppers said that they favoured stores offering promotions because they enabled them to stock up and save money in the long run. 'Buy One Get One Free' offers were more favoured by larger households and shoppers who were not working because they were more relevant to their needs in terms of price and quantities offered. Only 8% of shoppers said they like promotions as an opportunity to try new products.

Shrewd shoppers
IGD found that, for 31% of shoppers, offers and promotions are a main factor in tempting shoppers into stores other than their 'main' food retailer. Many shoppers had become promotionally shrewd, knowing when different promotions were due and shopping around to use them to their advantage.

"IGD's Shopper Insight research has found that, while EDLP is preferred to promotions, shoppers are unlikely to be motivated by a pure EDLP pricing strategy," concluded IGD's chief executive, Joanne Denney-Finch. "From a shopper's perspective, both prices and promotions can influence overall trolley price, and both strategies have a role to play when choosing where to shop. It is also clear that promotions are not just about reducing the overall cost of shopping but they are liked because they bring variety and excitement to what can be a routine task."

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