Which retail promotions are the most effective? Results from a survey of US shoppers to study the preferences of consumers for various retail promotions.

2. Jennifer Green Godette at Jennifer.GreenGodette@cognizant.comPhoto courtesy Lars Plougmann on Flickr licensed CC-BY-SA (http://www.flickr.com/photos/criminalintent/162478786/)

3. 2 Contents 3 Objective, Methodology & Respondent Profile 4 Research Results 21 Inference Drawn from Primary Research 29 Research Results by Generation, Income and Gender 46 About Cognizant

5. A total of 2,034 responses was collected

7. Average age: 45

8. Average household income: $59,6003

9. 4 Research Results

11. Women (85%) show a marginally higher preference for this promotion vehicle than men (74%).5

13. Brand is not selling well: 38 % male respondents vs. 26% female respondents.

14. CG manufacturers are trying to get rid of stock: 46% male respondents vs. 34% female respondents.

15. As consumers grow older, the perception that promotions are given to incite first trial strengthens.6

18. Rebates and cross category promotions seem to have low acceptability among consumers. Focus Area: In-Store PromotionsConsumers prefer to get the same product free as compared to a cross category product during the promotion of a product. Buy one get one free is the most preferred promotion vehicle for a store-based promotion. This is consistent across demographics and gives a strong indication to CG manufacturers on consumers’ preferred promotion vehicle. 8 4

20. Across age groups, consumers have a more negative perception of the availability of promoted products in-store. The acceptability of receiving a rain check in case of a stock-out in-store has a direct correlation with age.9

22. Brand name is an important criterion for buying a product online since it appears to compensate for the lack of information on an unknown product that has a good promotional deal.

23. Older demographic consumers (70+ years) place the highest importance on “Brand Name” when making a purchase online. 10

25. Most consumers do not see social media sites as a place to get information on promotional products.

26. Most effective method of finding online promotions:

27. Consumers aged < 18: social media websites/discussion

28. Consumers aged 18-25: daily deal sites

29. Consumer income < $30K: daily deal sites11

31. Older demographic consumers (55+ years) have low positive perceptions of the online medium as a means of getting discounts.12

33. Among the younger demographic consumers (<55 years), there is a marked preference for online promotions.13

35. Across all age groups and income groups, consumers unanimously think that better product information is available in store as compared to online.14

37. 85% of consumers aged 70+ think that in-store promotions are more reliable than online promotions.

38. There is negligible difference in perceptions among consumers in different income groups, since there is broad agreement that in-store promotions are more reliable.15

40. More female respondents (77%) than male respondents (70%) think that in-store promotions are more relevant than online promotions.

41. There is a direct correlation between age and the consumer belief that in-store promotions are more relevant than online promotions: 64% of consumers aged 18-25 years vs. 84% of consumers aged 70+ years.

42. Among different income groups, consumers consistently think that in-store promotions are more relevant.16

44. Compared to other age groups, fewer consumers aged 70+ think that products promoted online are never out of stock. 17

46. There are no marked deviations from the overall results across income and age group. 18

49. Respondents in higher income groups (Household Income > $75k) have shown higher inclination towards laptops and desktops than respondents in other income groups.20

50. 21 Inference Drawn from Primary Research

53. Strong customer perception plays an important role in product promotion. CG manufacturers need to customize their promotions depending on the target audience.22

55. Consumers are more interested in getting ‘buy one get one free’ than a discount when buying a product.

57. Consumers have a poor perception about the availability of products during store-based promotions  Increasing forecasting accuracy may be looked upon as a solution. 23

59. Buyer reviews and product pictures are not that important when making an online purchase.

63. Searching deals online provides an opportunity for consumers to do a quick comparison of similar promotions running at different stores, thereby increasing the chances of getting a better deal.

65. Old, inaccurate and insufficient product information on the internet/online seems to be one of the major reasons for dissatisfaction among consumers. 25

69. Even though it is easier to provide current, accurate and comparative promotional information on the internet, people still do not rate it much higher than in-store promotional information. This reinforces the previous insight that product information is not being managed efficiently and effectively for online promotions. 27

71. Since the internet and personal computing is ubiquitously available, CG manufacturers should strengthen their online redemption process. With the exponential growth in smart phones and devices (24% in 2010 worldwide, Gartner), promotion redemption using these devices is not a distant future.

72. CG manufacturers should make their redemption and return procedures for online promotions easy to increase the number of redemptions done online.

73. The lack of applications for smart phones and tablets could be one reason smart phones and tablets are the least preferred methods of redemption. 28

74. 29 Research Results by Generation, Income and Gender

75. “Which of the following promotions, Web sites or activities have you used in the past year to purchase products at a discount?” 1 Income-Based Analysis Generation- Based Analysis Gender-Based Analysis Coupons and BOGO are the most preferred promotions among all generations. Coupons and BOGO are the most preferred promotions among all income groups. Women have a marginally higher preference for Coupons and BOGO than men. 30

76. “Out of the following, select the reasons you believe product promotions are offered?” 2 Income-Based Analysis Generation- Based Analysis Gender-Based Analysis The perception that promotions are offered to incite first trial strengthens with increasing age. More male respondents than female respondents think that promotions are offered when the brand is not selling well or the CG manufacturers want to get rid of old stock. The perception that promotions are offered to incite first trial strengthens with increasing income. 31

77. “For store-based promotions, who do you think bears the cost of the promotions?” 3 Income-Based Analysis Generation- Based Analysis Gender-Based Analysis Older demographics (>55 yrs) seem more cynical about the part played by CG manufacturers in paying for promotions. There is no noticeable difference in consumer thinking among different income groups on this question. Almost equal amounts of men and women believe all four categories of response. 32

78. “Please rank the following types of promotions in order of preference for store-based promotions?” 4 Income-Based Analysis Generation- Based Analysis Gender-Based Analysis Almost 50% of consumers in all age groups prefer BOGO promotions. BOGO and coupons are clear winners in all income groups. BOGO promotions are the first choice among men and women. 33

79. “For store-based promotions, with which of the following statements do you most agree?” 5 Income-Based Analysis Generation- Based Analysis Gender-Based Analysis The acceptability of receiving a rain check when a stock-out occurs in-store has a direct correlation with age. Nearly 50% more female respondents than male respondents think that promotions advertised are not always available in-store. Consumers in all income groups are dissatisfied with the availability of promoted items in-store. 34

80. “Please rank the following in order of importance when making a purchase online?” 6 Income-Based Analysis Generation- Based Analysis Gender-Based Analysis Older consumers (70+ years) place the highest importance on “Brand Name” when making a purchase online. Value/price is the biggest driver for online purchases in all income groups. Value/price is the biggest driver for online purchases for women, but men place equal importance on price and brand. 35

81. “Please rank the following in order of effectiveness for finding online promotions?” 7 Income-Based Analysis Generation- Based Analysis Gender-Based Analysis Email promotions are most effective among all age groups. For consumers earning < $30K, daily deal sites are most effective for finding online promotions. Social media sites/discussions have been identified as the least effective way to find online promotions by both genders. 36

82. “Please rate your experience in terms of discount obtained from each of the following?” 8 Income-Based Analysis Generation- Based Analysis Gender-Based Analysis Email promotions are most effective among all age groups. Social media is still evolving as a satisfactory means of providing information on discounts. For each response category, the % of male and female respondents is almost the same. 37

83. “When comparing promotions available at a store and those available on the internet /online, with which statement do you most agree?” 9 Income-Based Analysis Generation- Based Analysis Gender-Based Analysis Older demographic consumers continue to be partial to in-store promotions. Female respondents put both online and in-store promotions on par with respect to the availability of good deals. Consumers at all income levels, (except consumers with income < $30K) think that better deals are available online than in-store . 38

84. “When comparing product information available at a store and information available on the internet / online, with which statement do you most agree?” 10 Income-Based Analysis Generation- Based Analysis Gender-Based Analysis Consumers in all age groups unanimously think that better product information is available in store vs. online. The number of consumers that believe better product information is available online increases as their income increases. Men and women both agree that better product information is available in-store rather than online. 39

85. “When comparing the reliability of promotions available at a store and those available on the internet / online, with which statement do you most agree?” 11 Income-Based Analysis Generation- Based Analysis Gender-Based Analysis 85% of consumers above 70 years old think that in-store promotions are more reliable than online promotions. There is negligible difference in perceptions among consumers in different income groups. Men and women both unanimously think that in-store promotions are more reliable. 71% 40

86. “When comparing the relevance of promotions available at a store and those available on the internet / online, with which statement do you most agree?” 12 Income-Based Analysis Generation- Based Analysis Gender-Based Analysis There is a direct correlation between age and the consumer belief that in-store promotions are more relevant than online promotions. More female respondents (77%) than male respondents (70%) think that in-store promotions are more relevant than online promotions. Among different income levels, consumers consistently think that in-store promotions are more relevant. 41

87. “When comparing the availability of products promoted in store and online, with which statement do you most agree?” 13 Income-Based Analysis Generation- Based Analysis Gender-Based Analysis Compared to other age groups, fewer consumers over age 70 think that products promoted online are never out of stock. More consumers with lower incomes think that products promoted in-store are never out of stock, as compared to consumers with high income. Marginally more men think that products promoted in-store are never out of stock, as compared to women. 42

88. “When comparing the ease of finding promotion information for in-store product promotions and online product promotions, with which statement do you most agree?” 14 Income-Based Analysis Generation- Based Analysis Gender-Based Analysis There are no marked deviations from the overall results across age groups. There are no marked deviations from the overall results across income groups. Male respondents show a marginal preference (56%) over female respondents (52%) on the ease of finding promotional information online. 43

89. “Which of the following product categories do you believe offer better promotions online than in store?” 15 Income-Based Analysis Generation- Based Analysis Gender-Based Analysis There are no marked deviations from the overall results across age groups. More female respondents than male respondents think that better promotions are available online than in-store in Apparel (45% vs. 35%), Cosmetics (21% vs. 15%) and Footwear (31% vs. 23%) Across all income groups, an equal % of respondents thinks that the best online promotions are offered in the electronics category. 44

90. “For promotions you have redeemed in the past year, please rank the following based on where the redemption has taken place most often?” 16 Income-Based Analysis Generation- Based Analysis Gender-Based Analysis Physical in-store redemption is still the most preferred way of redeeming promotions among consumers. Respondents in higher income groups (Household Income > $75k) have shown higher inclination towards laptops/desktops than respondents in other income groups. In-store redemption is the most preferred form of redemption for most men and women. 45

91. 46 About Cognizant

92. 47 About Cognizant A leading provider of information technology consulting, and business process outsourcing services With more than 50 global delivery centers and over 88,700 employees, we can offer a unique onsite/offshore delivery model to customers. A member of of the NASDAQ-100 Index and S&P 500 Index, Cognizant is a Forbes Global 1000 company. We are also ranked among the top information technology companies in BusinessWeek’s “InfoTech 100, Hot Growth and Top 50 Performers.”

94. Top Five: Consumer Goods Technology Magazine, 2011 Readers’ Choice for Consulting

95. Consumer Goods Technology Research Advisory Board (RAB) MemberCognizant’s Consumer Goods Practice has 5000+ technical and business experts in North America, Europe, Asia Pacific, and the Middle East. We work with leading companies in the consumer durables, food & beverage, footwear & apparel, and home & personal care segments.

96. Thank you