Promo Spend for Growing Brands: Cut Prices, Displays, or Media?

Given this reality, growing brands regularly face tough choices. Should they cut prices to stay competitive? Should they invest their limited budget in elaborate end-cap displays? Or is it better to allocate those dollars toward targeted digital media?

The challenge in making such choices isn’t choosing whether to spend, but rather determining which promotional lever drives the most profitable growth in a specific situation. Brands can choose the right lever at the right time by taking a data-backed approach to both price sensitivity and promotional strategies.

Four Common Mistakes Growing Brands Make with Pricing and Promotional Spend

Scaling brands must navigate a variety of headwinds when managing pricing and promotional strategies. As they determine how, when, where, and why to set prices and allocate their spend, they simultaneously contend with stiff competition, price-sensitive shoppers, and often-demanding retail partners, leaving little room for error.

Such pressures can lead to suboptimal actions. Brands may make hasty choices, like guessing price sensitivity or not seeking out retail-ready data to support their pricing and display tactics. In the interest of time, they might default to last year’s promotion plan. A brand may also opt for a single lever without a full understanding of incremental lift.

Guessing Price Sensitivity Instead of Measuring It

One of the most common and costly mistakes growing brands make is guessing price sensitivity. Sensitivity remains an issue in the current operating environment, as brands and their retail partners market to consumers who continue to grapple with their own challenges and who have shown fragmented shopping behaviors. Shoppers remain in caution mode as they allocate their budget based on the key drivers of value, convenience, and immediacy. Because consumers are so sensitive to price changes, guessing the right promotion depth is incredibly risky for SMBs.

Price sensitivity has tangible and significant implications for brands, especially growing brands. Picture placing a single dime on a table during a planning meeting. That ten-cent difference might seem small, but it scales aggressively. If your promotion moves 100,000 units, pricing your item incorrectly by just a dime represents massive risk or unmet profit. Success ultimately comes down to pennies and cents, requiring absolute precision based on POS data to ensure that discounts drive profitable volume.

Relying on Outdated Promotional Data

Another pitfall is relying too much on past promotional practices. It can be tempting for brands to simply recycle the same promotional programs year after year. They might glance at last fall’s strategy, copy it, and hope for similar results.

That habit is outmoded, though, given the current CPG and retail landscape. Consumer behaviors are shifting rapidly due to economic changes, supply chain disruptions, and other omnichannel trends. If an SMB bases decisions on assumptions or old data, the brand misses opportunities to capture new buyers.

Item-level data can unlock growth in this continually evolving and often nonlinear marketplace. Scaling brands can replace gut feelings and a “This is the way we’ve always done it!” philosophy by using insights such as weekly performance views and analyses of promotional performances. This kind of data enables them to better understand the impact of pricing and promotions. 

Misaligning Promotional Spend with Retailer Expectations

Manufacturers and retailers approach promotions with different goals. Brands want to move specific units and protect their margins. Retailers want programs that drive store traffic and category performance.

To sync those goals, precise data is crucial. When an emerging brand lacks hard data to support promotional pitches, retailers may push back on proposed price points or display requests. SMBs must confidently demonstrate to their retail partners exactly how a promotion will perform for both the brand and the overall category.

Using the Wrong Promotional Mix

To compete effectively, growing brands must understand the different levers available for their pricing and promotion strategies. Every option serves a specific purpose, and data is the key to tapping into their full potential.

• Price cuts: Temporary price reductions appeal directly to value-seeking shoppers. Leverage POS-driven data to pinpoint the exact price point that maximizes unit movement without eroding your profit margin.

• Features and displays: Physical placement in the store grabs attention and drives impulse purchases. Displays work best when paired with "new news," such as exciting product innovations or seasonal themes. Shoppers respond enthusiastically to newness.

The most effective promotions often use a combination of levers, informed by data and aligned to a specific business goal. If you sell dog food, for example, targeting known dog food buyers yields a massive impact. A small pet food brand can cast a wider net across all category buyers to build awareness. For the best results, amplify in-store display activity with targeted digital media that drives shoppers directly to retail partners.

How to Choose the Right Promotional Strategy

For growing brands, promotional success doesn’t come from spending more — it comes from spending with precision. An SMB can’t afford to launch a campaign and simply hope it works out. They should be able to simulate outcomes before committing to promotional spending.

Fortunately, agility and speed are among an SMB’s best advantages. When market conditions change rapidly, they can adjust strategy on the fly.

• Managing and measuring price elasticity: By leveraging accessible analytics, brands can complement their agility with an understanding of exact price elasticity. This insight helps brands gauge how price changes impact sales.

• Choosing displays that provide the best ROI: POS data gives brands the opportunity to evaluate the effectiveness of various display formats, such as endcaps, shelf talkers, or freestanding displays. By combining these insights with elasticity models and consumer trends, brands can select display types that align with their target audience.

Improve Your Pricing and Promotion Strategies with an Accessible Analytics Solution

Built for the needs of growing brands, Circana’s Liquid Data Go® solutions provide the precise analytics that emerging brands need to succeed. The solutions feature an intuitive price and promotion calculator designed specifically for agile decision-making.

Liquid Data Go models all products across a total store view down to the item level. This allows SMBs to get an accurate read on price elasticity for both their base prices and promo price points. The platform updates continually with new data, ensuring that models reflect the most current consumer behaviors.

Brands can quickly compare promotional scenarios to understand how different levers interact and where returns are strongest. With Liquid Data Go and other Circana solutions, the question is no longer whether to cut prices, rethink displays, or divert dollars to media, but which levers delivers the greatest return for a specific product, retailer, and moment in time.