Thursday, August 11, 2011

Deep discounting & FMCG / CPG brands.

General Mills & Unilever recently went thru' with deals with Groupon. The move was largely looked as a bold marketing experiment and an exercise in sampling. With Karl Schmidt, GM's director of promotion marketing, telling Advertising Age that "We're always looking for efficient ways to sample our products and given Groupon's scale, we thought this would be a way to reach a sizeable audience, next steps are to evaluate the results -- I think the early read is positive -- and then factor the results into our next fiscal year."

While it is commendable that the brands have gone ahead and experimented, deep discounts for the FMCG / CPG brands could be a head ache in the long run.

Deeply discounted offers would make it very difficult for the brand to make any monies and the initiative would be viewed as sampling - however the sampling is done to "brand in-sensitive" bargain hunting audience which is not the ideal solution.

Possibility of alienation with the other (larger) retail channel is the other significant risk that the brand takes on.

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