Inaugural study claims brand owners spend £25.6 billion on BOGOFs and other sales promotions

LONDON - Branded-goods manufacturers spend £25.6 billion annually on sales promotion activity within retailers, according to data released by the Institute of Sales Promotion.

More than half that total, £14.4 billion, was spent on retailer promotions such as BOGOFs n the 2007/8 financial year. That compares with £18.6 billion spent on above-the-line ad spend in 2008, according to Advertising Association data.

The research is the first project overseen by retail industry researcher Colin Harper, who was recently named as the ISP's first head of insight.

‘People only tend to notice the obvious marketing spend, on above-the-line advertising or obvious Point of Sale (POS) activity, for example. But sales promotion is a bit like an iceberg -- there is far more going on below the surface than immediately meets the eye,' Harper said.

According to Harper, estimating sales promotion investment by branded goods manufacturers is more complicated than tracking advertising spend, since sales promotion activity is not solely under the control of the marketing department but can be initiated by the sales, commercial or trading teams.

In future, Harper be looking at sales promotion spend by companies and public sector bodies in channels other than retail, including cars, technology, services providers and business-to-business, with a view to compiling a figure for the total UK annual spend on all sales promotion activity.

 

Total UK sales promotion spend through the retail chain by branded-goods manufacturers
Market Size Value 


Premium Products £1,000,000
Sales Promotion Agencies £780,061,315
Field Marketing Agencies £328,346,903
Handling Houses £20,000,000.00
Digital Agencies £559,214,793
Store Vouchers (as incentives) £800,000,000.00
Coupons - value of £479,000,000.00
(excl. store promtoed coupons)
POP £1,200,000,000.00
Door Drop delivery costs £35,000,000.00
Mailed Promotions £1,000,000,000.00
Retailer Price Promotions £14,404,073,436.87
Manufacturer Added Value £5,000,000,000.00
Total Promotion Investment £25,605,696,447.87

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