Over-reliance on discounting in premium has backfired, says expert

By Michelle Yeomans contact

- Last updated on GMT

Over-reliance on discounting in premium has backfired, says expert

Related tags: Trade, Late-2000s recession

The latest research from Imogen Matthews Associates, in association with YouGov, reports more consumers than ever are waiting for discounts before they buy cosmetics. A strategy which may have backfired for some premium brands.  

The findings detailed in this year’s Premium Market Report, which launches 7th​ April, shows that the percentage of women who say they will only buy when there’s a discount has increased from around a fifth in 2013 to over a quarter in 2014.

There’s no doubt that discounting helped stimulate growth in the beauty sector during the recession​,” says IMA’s managing director, Imogen Matthews.

What is also clear is that an over-reliance on discounting as a strategy has now backfired," ​she adds.

In fact, Imogen says not only are more women waiting for discounts before they buy, but there is strong evidence that brands that managed to resist discounts are now in a much stronger position than those that didn’t.

Premium sector will need to do more to differentiate itself from the mass market

The research makes for difficult reading for the premium sector in particular with the percentage of women who say they have traded down to cheaper skin care products, almost doubling from 8% to 14%.

While some might say that this is symptomatic of the recession, there’s also evidence that the trend to trade down is not just because of pressures on household income.

The research also goes onto highlight that the percentage of women who believe cheaper brands are just as effective as their more expensive counterparts has increased from 37% - 44%.

Thus, Imogen says the premium sector will need to do more to differentiate itself from the mass market.

And advises that; "Premium has always led the way when it comes to new technologies so it makes sense to put them at the heart of their campaigns. However, consumers will no longer stand for pseudo science and unsupported claims. The benefits of new technologies need to be backed up by hard evidence and offer a discernable result."

Now in its 22nd year, the Premium Market Report helps senior decision makers from the beauty industry to follow the right trends, produce profitable products and validate their most important strategic decisions.

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