Promote smarter, not harder

Often promotional strategies aren’t really strategy. They’re responses to market pressure and used to prop up volume.

The impact? McKinsey estimates 59% of CPG trade promotion spend loses money. That’s not a measurement problem. It’s a design problem.

The companies getting this right treat promotions as a disciplined investment – one that reinforces brand positioning, respects price architecture, and creates genuine value for shoppers, retailers, and the business. And given that trade promotion often represents 20% of revenue, even marginal improvements in effectiveness translate to material profit impact.

Quick takeaways:

• Promotions are a structural commercial lever. Design them intentionally or the market will do it for you.
  
  
• Most promotional value is lost to reactive decisions, not bad math. The discipline is in the design.
  
  
• Promotions shape mix, not just volume. When they’re aligned to brand role and price architecture, margin follows.

In this Q&A article, Alex Perilli, Senior Director at SKIM, and Joanne Foo, Director at SKIM, break down what separates promotional strategies that create value from those that quietly destroy it.

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Why has promotional strategy become such a central topic for commercial leaders?

Joanne: Consumers are more price-sensitive and more willing to switch. At the same time, many categories have become structurally promotional – the baseline expectation is a deal. That makes promotions both more important and more dangerous.

Used well, they drive demand and strengthen retailer relationships. Used poorly, they train shoppers to wait for discounts and compress category value over time.

In many markets in Asia, where platform-driven campaigns move in real time, the pressure to match the next promotion is relentless. Without a clear framework, that pressure pulls strategy in the wrong direction fast.

What does “good” look like?

Joanne: The starting point is always the same. You’ve got to be clear about what you’re trying to achieve. Growth is usually the goal, but not always – sometimes a promotion is about getting new people to try the product, or driving footfall, or moving shoppers up the range. None of those are wrong goals but running a promotion without knowing which one you’re after is.

From there, it’s about having the right metrics to know whether it worked. Not just whether sales went up, but whether those sales were incremental. Otherwise, you’ve just pulled forward demand you would have had anyway.

That distinction is what separates a promotional strategy from a cycle of events that’s hard to learn from. And it’s also why rigid playbooks tend to fail. The right framework gives you clear rules to evaluate against, but enough flexibility to adapt when the market shifts.

Where do strategies typically fail?

Alex: Promotions often fail less because of the math and more because of behavior. Many times, it can appear clear what a good promotion looks like on paper. The problem is that the conditions under which promotions get decided make it very hard to stick to that. For example:

• Retailers push for deeper discounts and the path of least resistance is to give it to them
  
  
• A competitor runs an aggressive promotion and the instinct is to match it
  
  
• Volume targets for the quarter create pressure to do whatever generates sales now, even if it costs more later

Individually, none of those feel like big decisions. But when they become the pattern, when every promotion is a reaction to something external rather than a deliberate choice – price architecture gradually distorts and brand value erodes, often so slowly that no one notices until a costly reset is required.

Joanne: And the damage rarely stays contained to one brand. When players across a category get locked into escalating promotions just to hit their numbers, it’s the whole category that loses value.

How do you decide the right mechanics, depth, and frequency?

Alex: Sales data is powerful here. Model it well and you can build a clear picture of what’s truly incremental, where depth starts to change behavior, and where additional discount stops doing anything useful. That’s real insight.

But sales data only tells you what’s happened, it can’t tell you what will happen if you change the mechanic (the type and structure of the offer) or move into a new occasion.

That’s where consumer research earns its place by testing different approaches before going to market, so you can separate real incremental demand from effects like pantry loading.

The most useful work uses both – understanding the past while designing the guardrails for the future.

Joanne: In Asia, we’ve seen this approach play out directly. Analysis has revealed that established promotional tactics that are widely assumed to drive demand can contribute surprisingly little to incremental sales. By simplifying the mix and cutting what wasn’t working, businesses unlocked greater profitability.

How should promotions align with brand equity?

Alex: A promotion should convert the demand your brand strategy is designed to create, not work against it. For high-equity brands, that means being selective. Heavy discounting tells the market the brand can’t justify its price, which chips away at exactly the perception you’ve invested in building.

But protecting brand equity doesn’t mean avoiding promotions. It means choosing the right mechanics. An occasion-led promotion, tied to a specific moment or consumer mission, can actually reinforce premium positioning rather than dilute it.

For mainstream brands, promotions drive scale; for lower-equity brands, they improve accessibility. In every case the question is the same: does this reinforce the role this brand is supposed to play?

How do promotions connect to price architecture and mix?

Alex: Every promotion influences which tiers grow and how the price ladder evolves – whether you intend it to or not.

When promotions are designed outside the portfolio system, they gradually shift volume into lower-margin tiers and compress the ladder.

When they’re designed within it, the opposite becomes possible: driving volume into higher-value products at the right moment, within clear guardrails, can strengthen mix and improve margin at the same time.

That case becomes stronger when teams are willing to look beyond straight discounting because bundles, multipacks, and occasion-led offers can deliver mix improvement while keeping the price ladder intact. Most businesses know this in theory. The harder part is building the internal case to act on it.

How do you work together with retailers to protect long-term pricing and category value?

Joanne: Pricing is at the discretion of the retailer. They set the promotional calendar and shape the commercial context. The risk is when that calendar is defined on autopilot in a changing market.

The more productive approach is understanding what each retailer is trying to achieve and structuring promotions that serve both agendas.

When you bring data into joint planning conversations, it stops being a negotiation about funding and starts being a conversation about creating shared value.

What does a well-designed promotional strategy ultimately deliver?

Joanne: It delivers value at every level, but the right way to think about it starts with the shopper.

When a promotion is grounded in what shoppers value and aligned to what the brand is there to do, the commercial outcomes follow. Retailers get traffic and growth. The business gets volume that doesn’t cost it margin or brand equity to generate.

What makes that possible is managing promotions as a system rather than a calendar through clear goals, consistent measurement, and an honest feedback loop between what you expected and what actually happened.

When those things are in place, promotions stop being a default response to pressure and start being a lever you’re in control of.

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