Seasonal offers, promotions and special products are part of the furniture for marketers, writes Carlos Villanueva, marketing scientist at the Ehrenberg-Bass Institute. But while limited-time offers (LTOs) may seem a good way to increase sales, might the numbers be leading you down the garden path this Easter?
Every year, when the Easter Bunny arrives, more than one kind of hunt is about to begin. While children (and adults!) everywhere enjoy hot cross buns and chocolate eggs, brands worldwide organise their own hunt, from baked goods to confectionery and so much more.
To take advantage of specific events or seasons, manufacturers introduce limited-time offers (LTOs) to increase sales and brand buyers. For these brands, who can buy them matters: if they can get new or past buyers to adopt their brand, they stand a better chance of winning precious market share over the long term. And, of course, they also get to build a bigger pool of revenue.
Mr Kipling’s latest LTO offering is a Simnel cake specially prepared for Easter. But the LTO hunt is not limited to just Easter. For example, the Valentine’s Day love spread by Barilla of heart-shaped pasta or even the death syrup that was the Coca-Cola x Oreo collaboration.
Noami Shooman, the global marketing director at Premier Foods, tells us that the primary goal of the LTO cake is to attract and increase penetration among “newer, lighter buyers” of the brand.
However, decades of research from the Ehrenberg-Bass Institute have pointed to one inescapable conclusion: brands grow by increasing the size of their customer base rather than selling more to their existing buyers.
This sounds like bad news for LTOs: all the effort and money poured into these might not lead to long-term growth.
However, this Ehrenberg-Bass research looked at permanent or long-term product launches, rather than limited products. LTOs’ limited nature may encourage a greater influx of new buyers to the brand, rather than just existing heavy users.
This question is important for manufacturers and retailers who spend part of their annual budget on LTOs.
If your LTOs aren’t bringing in new buyers to the brand, are they worth it? The Ehrenberg-Bass Institute is currently investigating the contribution of LTOs for brands with current and new buyers. Such research will identify buyers’ contributions to LTOs and provide direct insights from the industry on the varying role LTOs truly hold.
So, keep an eye out for upcoming research released first to Ehrenberg-Bass Institute sponsors.
