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Brands warned of damage from investing too heavily in price cut promotions as fresh IPM figures are released

The Institute of Promotional Marketing (IPM) has warned brands that relying too heavily on price discount promotions could damage long term values after its 2013 analysis found brands invested significant amounts on the practice.

According to research from the IPM, UK marketers spent nearly £55bn on promotional marketing in 2013, but a massive £40.4bn of that went towards price cut promotions with the remaining £14.4bn spent on value-added promotions, which offer consumers a reward or incentive to do something instead of offering a straight price cut.

Paul Godwin, head of insight at the IPM, said: “The economic downturn has inevitably meant that bargain hunting has become ingrained among Britons, with more than half buying brands only when on price promotion.

“Discounting has been seen as a cheap and dirty way of getting volume out of the door of the factory and the retailer. But the result is that promotional activity has changed from being a means to generate interest in brands to something that actively discourages brand purchase, unless there’s a deal.”

Godwin added that shoppers were becoming “immune” to price cut marketing and said brands must strike a balance.

“Increasing numbers of shoppers are looking for added value – they are becoming immune to discounting,” he said. “After all, when everything is discounted, then nothing is. The big question for brands and retailers has to be how best to strike a balance between price discounting and promotions that adds value for everyone – brands, retailers and consumers.”

The IPM said previous research has shown that too much emphasis on discount marketing can be damaging to longer term brand values.