Out of home businesses - marketing strategies: research

4. Price promotions

Shoppers were asked to record all examples of price promotion offers which were available within each outlet, either in-premise or online. This included:

• Multi-buys: for example, 3 for 2, buy one get one free, 4 for £1.50 type offers
• Reduced price, such as offers promoted as '25p off', 'half-price', '50% off', 'normally £2.50 but now £1'
• A discount offered for a minimum spend
• Prominent low-price promotion (e.g. '£1' or 'only 50p' in big signage)
• A larger sized product offered for the same amount or a small amount more

The mystery shoppers were given clear instructions on which type of promotions fell within each category (Appendix B). Meal deals are treated as a separate promotion and are reported on in Chapter 5.

This chapter presents the price promotion offers that were found at outlets, either in-premise or online. It details the types of promotions, the types of products on promotion and the way in which they were advertised.

Prevalence of price promotions

As Figure 4.1 shows, just under half (44%) of the outlets visited in person had a clear price promotion visible inside or outside the premises. Price promotions were less commonly observed online, being visible on an outlet's app or website in a quarter (25%) of cases.

In-premise, price promotions were much less common in coffee and cake businesses (12%) than in other types of outlets. This included Caffe Nero not offering price promotions at any of the outlets visited.

Online, price promotions were only observed at bakery (n = 3: Greggs, Subway and Independent) and QSR outlets (n = 2: KFC and Dominos).

Types of price promotions

Figure 4.2 shows that multi-buys and reduced prices were the most commonly observed forms of price promotion used by the out-of-home businesses sampled, with more than two in five (41%) of all in-premise price promotions being multi-buy offers and around a quarter (24%) being reduced price offers. Online, the most common price promotion was a discount for a minimum spend (55%, n=5), followed by a prominent low price promotion (22%, n = 2).

In-premise, 'other' types of promotion accounted for 13% of all price promotions visible in-premise. These included:

• Limited edition/seasonal and daily special promotions, with a specific item advertised at a lower price for that day only
• Lunchtime deals
• Discounted prices for loyalty card holders

The type of in-premise promotions varied by outlet category (Table 4.1). For instance, supermarkets had a higher proportion of multi-buy offers visible (53%) compared to all outlets (41%). Multi-buy promotions were visible in 61% of bakeries, compared to 41% of all outlets, and reduced price deals were least common in bakeries (9% compared to 24% overall). While larger sizes for the same price or a small amount more were not a common promotion overall (4%), there were relatively more of these offers in QSRs (19%).

Products on price promotion

A range of products were found to be on price promotion at outlets visited in-person, the most common of which were those which would be classed as less healthy snacks. This includes confectionery (14%), crisps or savoury snacks (12%) and cakes (10%) (Table 4.2).

Online, the product most commonly found to be on price promotion was pizza (30%) followed by savoury pastries (20%).

Promotions on healthier versus less healthy items

Where possible, products were categorised as either 'healthier' or 'less healthy' items (uncategorised items were those where it was not possible to determine whether it constitutes a healthier or less healthy option due to the general nature of their description (for instance sandwiches or other cold drinks) (see Chapter 2 methods). Figure 4.3 shows that, of the in-premise products on price promotion, the majority (73%) were less healthy, while only 8% were healthier and 19% uncategorised. Online, there were no healthier products found to be on price promotion; just under two-thirds (70%, n=7) were less healthy and 30% (n=3) were uncategorised.

As might be expected, the types of products on price promotion varied according to outlet type. In bakeries, for instance, there were more price promotions on cakes (17%) than in other outlet categories. Among QSRs, price promotions were more commonly found on items such as pizza (27%) and fried chicken (23%). Among supermarkets, crisps and savoury snacks (25%) and confectionery (22%) were most common, while in convenience outlets the most common products on price promotion were confectionery items (29%).

As with in-premise price promotions, there was some variation by outlet type online. While pizza was the most common product type in QSRs with a price promotion (60%), among online bakeries it was savoury pastries (40%).