Moving Past Price: A Guide for Modern Promotions

Moving Past Price: A Guide for Modern Promotions
Consumers enjoy the shopping experience more when they believe they’re getting something special or out of the norm, even when they’re not

Models for pricing and promotions are guided by the assumption that shoppers are consistently rational beings. But according to research, they’re actually far more apt to act on impulse. To account for this fact, pricing and promotional practices need to be reconsidered.

Consumer Behavior

One recent study revealed that 94 percent of Americans indicated that they would take advantage of an exclusive offer if it weren’t typically offered to the general public. Survey participants selected this option over a price-match guarantee, and 41 percent said they would likely seek out something to buy just to use the offer.

Data also shows that the lure of a deal is sometimes “too good to pass up.” Shoppers enjoy the experience more, online and off-, when they believe they’re getting something special or out of the norm, even when they’re not. Discounts, coupons and other promotions spark feelings of victory and satisfaction, feelings that trump price alone.

Acknowledging this shift is vital because it’s in direct contrast to how CPG and retail promotions are constructed. Change is necessary for CPGs and retailers to compete in today’s environment. Rather than sticking their heads in the sand, it’s time to embrace technology that enables them to capitalize on modern consumer behavior.


Digital coupons and in-store promotions can work together to create a single, cohesive shopper journey, regardless of whether that journey is motivated by months of product research or an impulse buy. It’s possible to use digital coupons to inform and stimulate in-store purchases in creative ways, and vice versa. These insights can then be used to better predict in-store and online engagement. For example, shoppers “clip” offers they like online and redeem them in store. Testing engagement with various digital offers is then measured in real time to inform future in-store trade promotions.

Looking at experimentation a bit deeper, take “Buy One, Get One 50 Percent Off” versus “Get 25 Percent Off One.” The slight difference in the offer structure could lead to vastly different responses and rates of engagement. To determine performance, marketers have long relied on statistical-regression models to predict how each will do in various markets, but if stores have never run a BOGO promotion before, there’s no data to feed into the model attesting to its effectiveness in the real world.

Aside from regression models, expensive in-store pilots have been an option. This approach takes months to execute and typically only allows brands to test a few offers at a time. Additionally, it’s difficult to control for noise at each retail location, with external influences like competitor activity, weather, execution or seasonality at play.

Today, however, technology can analyze a promotion’s response in real time. Platforms track promotion performance in ways that allow brands to see what works best with live shoppers and make instant adjustments. Digital experimentation empowers companies to match and perpetually update online offers and in-store promotions, with no guesswork involved.

Get Smart

Another vital piece of the marketing technology puzzle for retailers and CPGs is artificial intelligence. AI, machine learning and data analytics are being applied to inform marketing and pricing decisions.

For example, in situations where extreme weather wreaks havoc, systems can predict that certain foods may not be available at certain times at the same levels, despite the prior year’s models. Therefore, brands can alter their promotion schedules and discounts accordingly, while planning some exclusive deals for items in limited supply.

This scenario could also result in an increase in CPG sales in a particular area to make up for the shortfall of expected products in others. Perhaps spring is unseasonably warm early on, and a beverage manufacturer still has peppermint-flavored options on shelves. A company might open up an “exclusive” sale on “limited-time flavors” to get rid of potential stock overages as customers’ tastes shift toward other flavors more popular in warmer seasons. These examples are just the tip of the iceberg.

AI analyzes millions of different data points remarkably fast to deliver the information needed to drive promotions. Systems parse data in very specific ways, enabling brands to maximize their potential. Promotions become far more customized, which places them in better position to be redeemed, whether based on a shopper’s momentary whim or by winning on price. Intelligence, coupled with predictive analytics, offers an unparalleled level of flexibility.

With advances in technology, marketers can try out numerous new promotions in a number of ways. They can move far beyond price-based offers. By letting consumers choose what works best and when, as well as measuring and acting upon that data, retailers and CPGs can attain a new level of success.

About the Author

David Moran

David Moran is the co-founder and chairman of Palo Alto, Calif.-based Eversight, which specializes in AI-powered pricing and promotions.  Prior to founding Eversight, Moran was the global VP sales, revenue management for Anheuser-Busch InBev nv/sa, the world’s largest brewer. Earlier in his career, he was a leader in McKinsey & Co.’s consumer pricing service line.

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