Small brands rely on promotion

Posted by Oliver Koll on Jul 21, 2015

promoThe average brand in a frequently purchased category (more than ten times per year) is sold on promotion by at least one of the top three retailers in a country for 28 weeks per year. This is twice as often as the average brand in an infrequently purchased category (less than 5 times per year).
The average leading brand is on promotion three times as often as the average #6 to #10 brand in a category (36 weeks vs 12 weeks). However, the promoted percentage of sales hardly differs in either case. Why? If you are big or shoppers have to buy a category often, they are more likely to choose a brand at its regular price. In other words: The average small brand or brand in an infrequently purchased category relies much more on price promotions.

Addendum: 01.02.2016
A recent blog showed that small and large brands sell a similar percentage of their volume on promotion, while large brands are on promotion more often. The conclusion as per the heading caused some confusion.
To clarify consider this: A large brand that is on promotion 12 weeks and in these weeks sells 40% of its volume sells about 1.5% of its yearly volume in a non-promoted week (and 3.5% in a promoted week)
A small brand that is on promotion 7 weeks and in these weeks also sells 40% of its volume sells about 1.33% of its yearly volume in a non-promoted week (and almost 6% in a promoted week).
This is evidence that larger brands enjoy more salience at regular prices and rely less on discounting when it comes to driving choice at the POS.