Marketing unhealthy brands – an analysis of SKU pricing, pack size and promotion strategies that increase harmful product consumption

ABSTRACT

Unhealthy product marketing drives non-communicable disease, and more research into the strategies that increase unhealthy product consumption is essential to improve regulation and disease prevention. This study’s retail audits captured point-of-sale stock-keeping unit (SKU) price, pack and promotional details for leading brands across unhealthy product categories, including high-sugar junk food and drinks, alcohol, and tobacco, as well as a comparison sample of non-harmful products. Analysis and per-unit price-promotion differences across SKUs identified commonalities in unhealthy product brand strategies including dynamic price promotion and volume discounting, which was more prevalent for unhealthy compared with non-harmful brands. Interpreting findings in relation to consumer psychology and marketing theory exposed a widespread strategy specifically designed to encourage heightened consumption by punishing smaller SKU purchases with significantly higher per-unit prices, while rewarding larger SKU purchase with lower prices. Policy recommendations, including controlling unregulated price-promotion variables, are discussed along with this study's limitations and future research directions.

KEYWORDS:

• Volume discounting
• price promotion
• sustainable food consumption
• unethical marketing
• alcohol, tobacco and sugar regulation
• preventative health

Introduction

The marketing of unhealthy products, which include high-sugar junk food and drinks as well as alcohol and tobacco, is a recognised driver of non-communicable disease (NCD) (Lužar et al., 2021). Such marketing stimulates sales and accelerated consumption, increasing the incidence of NCDs (Coker et al., 2019). NCDs such as cancer, cardiovascular disease, respiratory diseases, and diabetes are the world’s leading cause of death and ill-health (World Health Organization, 2021). The main NCD risk factors are obesity, high blood pressure, and high levels of glucose and fat in the blood. Unhealthy diet, excessive alcohol consumption and smoking all heighten NCD risks (World Health Organization, 2021). Further research is therefore essential to reduce risky consumption and to inform marketing regulation and preventative health practices that support disease prevention and pro-health behaviours (Rasul et al., 2021). Despite a corresponding recent increase in health-related studies (e.g. Ciasullo et al., 2022), including papers in JSM (e.g. Lim, 2021), more research is warranted (Yap et al., 2021).

Unhealthy product marketing research has often involved surveys to understand the drivers of consumer behaviour (e.g. Rasul et al., 2021). Fewer studies have evaluated the marketing dimensions that promote unhealthy products (e.g. Ireland et al., 2021). While numerous marketing variables can be considered (e.g. Ciasullo et al., 2022), unhealthy product price promotion and volume discounting have been reported as priorities for future research (Iranmanesh et al., 2017; Levy et al., 2022)

Retail audit research has most frequently examined price and promotion within individual unhealthy product types, such as soft drink, alcohol or tobacco. However, other researchers have stressed the need for investigations that transcend categories so that common regulations and preventative health measures can be developed and applied broadly rather than targeting individual categories in isolation (Ireland et al., 2021). Regardless and despite the recognised impact of price promotions on unhealthy consumption, few studies have examined price promotion across unhealthy product categories and so the corresponding methodological protocols are limited (Riesenberg et al., 2019).

Some retail audit researchers used long-term weekly pricing data to calculate mean prices to demonstrate unhealthy product pricing patterns (e.g. Riesenberg et al., 2019). Others have recommended deeper analysis of unhealthy product brand portfolios rather than general product-price investigation (Greenland et al., 2016; Lužar et al., 2021). Such brand portfolio analysis uses fewer data collection points and in-depth descriptive analysis of marketing variables to interpret strategic intent (Laforet, 2015).

In response to the calls for further research to expose commonalities in unhealthy product price-promotion brand strategies, this study investigates the point-of-sale stock-keeping unit (SKU) price, pack and promotion details for popular brands across unhealthy product categories, including high-sugar junk food and drinks, alcohol, and tobacco, as well as a comparison sample of non-harmful products.

Research context

Australia provides the context for this study and is particularly deserving of unhealthy product marketing research. In Australia, around 90% of deaths are premature due to NCDs (World Health Organization, 2018). Compared to other countries, Australia’s performance in modifying NCD risk factors is mixed (Organisation for Economic Co-operation and Development – OECD, 2017). For example, Australia has some of the world’s toughest tobacco marketing controls and correspondingly one of the lowest smoking rates (Greenland et al., 2016). Yet it has above average levels of excessive alcohol consumption and one of the highest obesity rates (OECD, 2021). One-third of Australians are obese and live on average 2.7 years less and reduce the country’s GDP by 3.1% (OECD, 2021).

Although a leader in tobacco marketing regulation, Australia has not adequately addressed poor diet and harmful alcohol use. More Australia focused research has therefore been called for to inform evidence-based regulation that targets the other NCD risk factors and unhealthy product categories (Wijnen et al., 2022).

Literature review

Price promotion and volume discounting

Substantial marketing literature has informed pricing strategy designed to help practitioners maximise sales (Revoredo-Giha et al., 2018). Reviewing 221 sales promotion articles, Santini et al., 2016) confirmed the significant impact of price on purchase intention and sales volume, as well as long-term brand benefits from perceived quality and increased loyalty. Marketing research has validated the price-demand curve, including the strong inverse relationship between price and sales (Cuellar et al., 2012). Price elasticity for demand is the percentage decrease in demand resulting from a 1% increase in price (Winston, 2014). In the context of unhealthy products, pricing research has found that some products, such as confectionary and soft drinks, have higher price promotion elasticities (Revoredo-Giha et al., 2018). Although the impact of price promotion on sales is transient, which is why many manufacturers often vary their price promotions (Maxwell et al., 2012).

In addition to price promotions, lower per-unit prices for larger pack sizes (i.e. volume discounting) is known to increase sales by enhancing consumer perceptions of value and convenience (Iranmanesh et al., 2017). Price and pack size optimisation research (e.g. Wansink, 1996) has highlighted how volume-based discounts stimulate increased product consumption with individuals that purchase more consuming more – a concern when products are unhealthy. Furthermore, multi-unit promotions that offer discounts increase volume sales more than discounts offered for single items (Drechsler et al., 2017).

Unhealthy product pricing

Price is recognised as the key consumption predictor within the unhealthy product marketing mix, particularly for low-income consumers (Chandon & Wansink, 2012). Unhealthy product pricing regulation is therefore one of the most effective means for reducing excessive consumption (Wardle & Chang, 2015), as shown when additional taxes have been applied (Cobiac et al., 2017). However, in Australia, price promotion and volume discounting by unhealthy product manufacturers to undermine such regulation has been reported (e.g. tobacco – Bayly et al., 2019; alcohol – Wardle & Chang, 2015; unhealthy food and drinks – Zorbas et al., 2019). Therefore, a better understanding of unhealthy product manufacturers’ price-promotion strategies has been determined as essential for informing public health regulation (Houghtaling et al., 2021). However, price promotion and volume discounting have been highlighted as understudied areas warranting more research (Iranmanesh et al., 2017; Levy et al., 2022), and as yet globally there are no regulatory measures to reduce their influence on unhealthy product consumption (Riesenberg et al., 2019).

Echoing findings from earlier marketing research, contemporary unhealthy product research has confirmed the role of price promotion and volume discounting in augmenting brand familiarity, perceived value, and impulse buying (Powell et al., 2016). In addition, research comparing unhealthy products with non-harmful grocery items has found that price promotions are more prevalent among unhealthy products (Bennett et al., 2020), which suggests they correspond to greater price-demand elasticities (Revoredo-Giha et al., 2018).

Despite such insights, most former studies have focused on individual unhealthy product categories (e.g. Revoredo-Giha et al., 2018) rather than harmful product categories in general. This may have obscured some of the practices driving unhealthy consumption and the corresponding development of regulations to minimise the consumption across unhealthy products (Ireland et al., 2021). In line with this, Powell et al. (2016) noted that few former studies have examined price promotions across multiple product varieties and pack sizes, and recommended more corresponding research.

It has also been suggested that more research is required to investigate brand strategy used in unhealthy product marketing (Greenland et al., 2016). However, prior pricing studies have often examined unhealthy products in general rather than brand pricing strategy per se (e.g. Powell et al., 2016; Wardle & Chang, 2015; Zorbas et al., 2019). The significance of brand is well-established in the marketing literature and has been determined as especially important for harmful product marketing (Lužar et al., 2021). Furthermore, since fast-moving consumer goods (FMCG) marketing strategies are informed and implemented by brand managers, research that focuses on product categories may overlook important strategic nuances.

Methods

Design

To investigate brand SKU price-promotion, this study followed some of the branding research principles of Laforet (2015) and adhered to a retail audit approach outlined by Greenland et al. (2016). Price and pack sizes for leading brand SKUs were captured for a selection of popular unhealthy and non-harmful brands, along with related point-of-sale information. This brand focused research approach relies on detailed, descriptive analysis to provide strategic insights. Unhealthy brand pricing and point-of-sale promotion strategies were then interpreted in relation to marketing and consumer psychology literature.

Unhealthy product retail audits have often relied on in-store data collection (Grigsby Duffy et al., 2020), data captured from websites (Zorbas et al., 2019), or a combination of such approaches (Riesenberg et al., 2019). This study used both approaches because both the physical store and online environments promote grocery brands, including unhealthy products (Maganja et al., 2022). Online point-of-sale data was first obtained from webpage screenshots, with in-store SKU availability and prices then verified via store visits.

Supermarket sample

Australian supermarkets dominate grocery, alcohol, and tobacco sales (2022a; Euromonitor International, 2021) and are the logical focus for unhealthy consumption research (Grigsby Duffy et al., 2020). Consistent with other unhealthy product pricing research (e.g. Riesenberg et al., 2019), this study focused on one of Australia’s largest supermarket retailers.

Repeat supermarket retail audits are often used to investigate brand strategy (e.g. Laforet, 2015). Like Laforet’s (2015) research, two audits were conducted for this study in February 2019 and May 2022. The two audit waves enable the persistence or otherwise of brand strategies, in this case relating to price and point-of-sale promotion, to be evaluated. The first wave also served as a pilot, facilitating the development of a more robust design for wave two.

Retail audits were conducted in Australia’s eight states’ capital cities, with a central postcode selected and entered as the shopper location on the retailer’s website before capturing SKU details. Subsequent in-store validation was then conducted the same day at a store with the same postcode.

Product category and brand sample

Popular brand variant SKU details were captured for unhealthy product categories, as well as categories not considered harmful for comparison purposes (see Table 1).

Table 1. Sample of brand variants and product categories investigated in each retail audit wave.

	Product Category	Brand Variant	SKUs
WAVE 1
Unhealthy products	Beer	Coopers Original Pale Ale	8
	Carbonates	Schweppes Solo Original Lemon	6
	Chocolate confectionary	Cadbury Dairy Milk (block/bar)	3
	Cigarettes	John Player Special (JPS) Blue	8
	Potato chips	Thins Original	3
Comparison products	Essential household	Kleenex Complete Clean Toilet Paper	2
	Personal care	Colgate Total Original Toothpaste	3
WAVE 2
Unhealthy products	Beer	Great Northern Original Lager	8
	Breakfast cereal	Kellogg’s Nutri-Grain	3
	Carbonates	Coca-Cola Classic	11
	Chocolate confectionary	Cadbury Dairy Milk (block/bar)	3
	Cigarettes	John Player Special (JPS) Blue	9
	Potato chips	Smith’s Original Crinkle Cut Chips	3
Comparison products	Bottled water	Mount Franklin Spring Water	4
	Instant coffee	Nescafe Gold	2
	Laundry detergent	Omo Active Liquid	2

Category selection was informed by other studies and included the most widely reported harmful products (e.g. Bayly et al., Wardle & Chang, 2015; Zorbas et al., 2019), as well as non-harmful products for comparison (e.g. Bennett et al., 2020; Riesenberg et al., 2019). Relating to brands, some brand strategy researchers randomly selected leading manufacturer brands (Laforet, 2015), while others purposefully selected popular brand variants (e.g. Greenland et al., 2016). This study followed the purposive approach. The first audit wave captured popular but not necessarily the leading brand variant in each product category. The second wave focused exclusively on the bestselling variants as per industry reports (e.g. Euromonitor International, 2022b). The second wave captured an additional leading breakfast cereal brand variant, which represents another widely reported unhealthy product category (e.g. Riesenberg et al., 2019), as well as other non-harmful comparison brands.

Results

SKU portfolios

As shown in Table 1 (column 4), the number of brand variant SKUs varied. SKU brand variant portfolios were largest for carbonates (carbonated soft drinks), cigarettes and beer. Beer and carbonates were sold in both glass bottles and cans, and carbonates were also sold in PET plastic bottles (see Table 3).

Table 2. Cadbury Dairy Milk SKU prices (AU$) by city/state – retail audit wave 2.

Cadbury Dairy Milk SKU	Canberra ACT	Sydney NSW	Darwin NT	Brisbane QLD	Adelaide SA	Hobart TAS	Melbourne VIC	Perth WA	Mean price
Bar 50g	0.90*	1.50	1.50	1.50	1.50	1.50	1.50	0.90*	1.350
Bar 180g	3.50*	2.50*	5.00	2.50*	2.50*	5.00	2.50*	3.50*	3.375
Bar 343g	6.00	6.00	6.00	6.00	6.00	6.00	6.00	6.00	6.000

Note: * Special/price promotion.

Table 3. Brand variant SKU pack options and prices (AU$), ordered by size – retail audit wave 2.

Category – Brand Variant & SKU Pack Type	SKU size/volume	Mean SKU price	Mean price per unit/volume*
CARBONATES – COCA-COLA CLASSIC	ml	$	Litre $
Can single 250ml	250	2.208	8.833
Can single 375ml	375	2.500	6.667
Glass bottle single 385ml	385	3.817	9.913
PET bottle single 600ml	600	3.713	6.188
Glass bottle multipack 4 x 300ml	1200	5.583	4.653
PET bottle single 1250ml	1250	2.269	1.815
PET bottle single 2000ml	2000	3.631	1.816
Can multipack 8 x 250ml	2000	8.271	4.136
Can multipack 10 x 375ml	3750	11.775	3.140
Can multipack 24 x 375ml	9000	22.694	2.522
Can multipack 30 x 375ml	11250	37.100	3.298
CIGARETTES – JPS BLUE	Sticks	$	Stick $
23 single pack	23	34.950	1.520
25 single pack	25	43.950	1.758
30 single pack	30	48.325	1.611
40 single pack	40	65.294	1.632
23 twin pack 2 x 23	46	65.283	1.419
40 multipack 4 x 40	160	256.950	1.606
30 multipack 6 x 30	180	289.238	1.607
23 multipack 8 x 23	184	277.250	1.507
25 multipack 8 x 25	200	335.950	1.680
BEER – GREAT NORTHERN ORIGINAL LAGER	ml	$	Litre $
Glass bottle single 330ml	330	4.300	13.030
Can single 375ml	375	4.333	11.556
Can single 500ml	500	6.00	12.000
Glass bottle single 700ml	700	8.400	12.000
Glass bottle multipack 6 x 330ml	1980	19.643	9.921
Glass bottle multipack 3 x 700ml	2100	21.000	10.000
Glass bottle multipack 24 x 330ml (4 x 6 pack)	7920	51.500	6.503
Can multipack 30 x 375ml	11250	60.00	5.333
CHOCOLATE – CADBURY DAIRY MILK	g	$	kg $
Bar single 50g	50	1.350	27.000
Bar single 180g	180	3.375	18.800
Bar single 343g	343	6.000	17.500
BREAKFAST CEREAL – KELLOGG’S NUTRI-GRAIN	g	$	kg $
Pack single 290g	290	5.350	18.448
Pack single 470g	470	6.693	14.240
Pack single 765g	765	9.036	11.811
POTATO CHIPS – SMITH’S ORIGINAL	g	$	kg $
Pack single 60g	60	1.775	29.583
Pack single 170g	170	2.533	14.897
Pack single 380g	380	5.833	15.351
BOTTLED WATER – MOUNT FRANKLIN SPRING WATER	ml		Litre $
PET bottle single 600ml	600	2.088	3.479
PET bottle single 1500ml	1500	2.444	1.629
PET bottle multipack 6 x 500ml	3000	4.025	1.342
PET bottle multipack 20 x 500ml	10000	8.467	0.847
INSTANT COFFEE – NESCAFE GOLD	g	$	kg $
Jar single 100g	100	10.500	105.00
Jar single 200g	200	12.75	63.750
LAUNDRY DETERGENT – OMO ACTIVE CLEAN	ml	$	Litre $
Plastic bottle single 2000ml	2000	16.500	8.250
Plastic bottle single 4000ml	4000	29.125	7.281

Note: *Worst value SKU (highest unit/volume price); Best value SKU (lowest per unit/volume price).

In both audit waves, the brand variants were available at all locations. Although SKU availability was consistent between the online and in-store environments, some SKU options were unavailable in some locations. For example, in the second wave the larger 700 ml glass bottle of Great Northern was only available in Darwin, while the Coca-Cola 385 ml glass bottle was only available in three of the eight locations.

SKU prices, price promotions and volume discounts

SKU prices were consistent across the online and store channels. Prices were also generally consistent across the eight cities. However, some SKU price differences by location were observed in all product categories. Differences were associated with special offers or price promotions, as illustrated in Table 2 for chocolate confectionery in wave 2.

Price promotion and volume discounts were evident for all brands across both audit waves. Across locations, different price promotions were apparent for all product categories. SKU price variations can partly be ascribed to audits not always being conducted on the same day across all locations, with specials and price promotions changing regularly. However, different price promotions for the same SKUs were also observed operating concurrently across different locations, highlighting the dynamism of these marketing variables.

Table 3 presents SKU pack and national mean price ranked in order of size, along with the mean per unit/volume price, for unhealthy and comparison brands. Calculating the national mean SKU prices across locations overcomes location-price variations and facilitates identifying trends. In Table 3 brands with the largest SKU portfolios appear first. Only details for the second wave are presented, due to space limitations and given the consistent patterns observed in both audit waves.

As shown in Table 3, apart from carbonates and cigarettes, the general trend observed was for smaller (often the smallest) pack sizes to be assigned the highest per unit/volume prices, with the converse for larger packs and multipacks. Therefore, the largest pack size often represented best value and the smallest pack size the worst – see the underlined and highlighted prices in the fourth column of Table 3.

Notable exceptions to this volume discount trend were observed for both carbonates brands (Solo – wave 1; Coca-Cola – wave 2) where the 1.25 and 2 litre PET bottle SKUs offered best value. Furthermore, for JPS Blue the twin 23 pack option was the best value SKU in both waves.

Figure 1 presents analysis of the price per unit/volume differences between best and worst value SKUs captured in wave 1 and reveals the saving associated with the best value option. The ratios presented were calculated by dividing the price per unit/volume of the worst value (MAX PRICE) SKU by the price per volume of the best value (MIN PRICE) SKU. In Figure 1, Schweppes Solo offers the greatest volume discount. The 600 ml Solo PET bottle per volume price is 4.6 times more expensive than the 2-litre bottle. Likewise, the smaller SKU pack sizes for Coopers Pale Ale and Cadbury Dairy Milk charged more than double the price per volume compared with the larger best value SKUs. While the non-harmful comparison products also offered volume discounts, these were much smaller with the per volume prices for the smaller SKUs for Colgate toothpaste and Kleenex toilet paper 1.25 and 1.2 times more expensive respectively than the larger SKUs.

Figure 1. Wave 1 unhealthy brand ratios of lowest to highest price per volume SKUs (including SKUs with maximum & minimum price per volume, SKU pack size & price).

Source: National mean SKU price based on first retail audit wave prices across the eight locations. NB. Prices are rounded to the nearest cents, and ratios to two decimal places.

Similar trends in were observed in the second retail audit wave, as illustrated in Figure 2, with the leading carbonates and beer brands offering the greatest volume discounts. The comparison non-harmful product bottled water also had large scale volume discounting.

Figure 2. Wave 2 Unhealthy and comparison brand ratios of lowest to highest price per volume SKUs (including SKUs with maximum & minimum price per volume, SKU pack size & price).

Source: National mean SKU price based on second retail audit wave of prices across the eight locations.NB. Prices are rounded to the nearest cents, and ratios to two decimal places.

Point-of-sale merchandising and information

In both audit waves, in-store price-promoted SKUs often received greater shelf-area allocations and were positioned at eye level. Online, price-promoted SKUs were also often located centre page, with larger images. In both point-of-sale environments, same-brand-variant SKUs were presented together. All SKUs for each variant appeared together online, which was the same in-store except for tobacco (which by law must be hidden behind the kiosk counter) and individual carbonates (i.e. single cans and bottles positioned in fridge displays in the front aisle near checkouts).

Compared with other product categories, tobacco had the least information and merchandising, with no price promotions communicated online or in-store. In alignment with Australia’s tobacco retail display bans, only the cigarette brand variant name appeared in-store, with corresponding SKUs and prices presented in a poster at the kiosk. On this poster the JPS twin pack prices were detailed on separate lines. Online a broader array of available JPS SKU options was presented, including images of the pack.

For the other products categories, price-promoted items were often assigned other displays within the retail environments in addition to their usual location. For example, many in-store SKUs that were on special were assigned additional merchandising and separate displays at high footfall locations, such as checkouts and aisle-ends. Online such items often appeared prominently in the retailer’s weekly specials section (i.e. first item on the webpage menu bar), with a prominent subsection specifying ‘buy more – save more’. In-store paper catalogues with similar price promotion messages were positioned near the entrance and in the front aisle at or near the checkouts.

Outside of beer and cigarettes, all SKUs for the other product categories in both retail environments had additional price-per-volume information clearly communicated beneath them (e.g. cost per 100 g). The best-value SKUs, especially those with price promotion, were also often flagged by conspicuous signs, mostly yellow and/or red, which indicated the dollar value saving from the promotion.

Discussion

This study’s brand SKU portfolio investigation relied on in-depth descriptive analysis as recommended by prior brand focused researchers (Greenland et al., 2016; Laforet, 2015). However, given the limited prior studies specifically investigating SKU price promotion across unhealthy product categories and lack of corresponding methodological protocol (Riesenberg et al., 2019), some of the brand analyses presented, such as the prices across SKU portfolios and the ratio of lowest to highest price per unit/volume SKU, evolved during this study.

This study’s analysis provided insights into leading brands’ SKU portfolios, price promotions and volume discounts, as well as a point-of-sale information across a range of unhealthy and comparison product categories. Findings confirmed consistent patterns in unhealthy brand SKU price promotion and volume discounting, and their prime positions within store environments along with corresponding best-value information, which ostensibly encourage larger purchases. Considering the findings in relation to extant marketing literature assists in interpreting the strategic intent of the unhealthy product brand SKU portfolios and price-promotion.

In this study, the variations observed in SKU prices across the different locations illustrated the dynamism of price promotions, especially for the leading unhealthy product brands. Such variations echo the marketing literature, which reports that regular price promotion for demand-elastic products is the best way to stimulate sales and increase consumption, and to overcome the declining impact of sales promotion over time and to maintain brand appeal (e.g. Maxwell et al., 2012). Furthermore, the multipack volume discounts frequently observed for the unhealthy product brands in this study have been demonstrated in prior marketing research to be more effective in increasing sales than single item promotions (e.g. Drechsler et al., 2017).

While all the popular brand variants investigated offered a range of SKUs, those from the unhealthiest product categories (i.e. cigarettes, beer and carbonates) were the most highly differentiated. Such differentiation enables manufacturers to target and satisfy a greater range of consumer segments, generating more sales compared with less differentiated products (e.g. Kotler et al., 2009). It also provides greater opportunity for manufacturers to consistently change promotion offerings.

This research also confirmed consistency between brand SKUs offered online and in-store across locations, supporting the finding of Zorbas et al. (2019) and illustrated manufacturer efforts to present the full brand SKU range to consumers.

Price promotions were observed across locations for most SKUs, including the smallest. This is despite such promotions being more common for larger SKUs, and the largest in particular. Volume discounting, with smaller pack sizes assigned the highest per unit prices and larger pack sizes assigned the lowest, was also common. Analysis of the unhealthy brands’ SKUs that offered the best versus worst value demonstrated the substantial impact of this volume discounting strategy, with the most sizeable discounts oriented to the unhealthy carbonates, beer and chocolate product categories in particular. This finding supports the observations of Revoredo-Ghia et al., (2018) on unhealthy food higher price-demand elasticities, and demonstrates these greater elasticities apply across unhealthy product categories. For example, the carbonate 1.25 and 2 litre PET bottles were assigned price per volume one quarter or less than that of smaller SKUs, including the 600 ml PET bottle. Similarly, multipack beer SKUs were less than half the price per volume of the single cans and bottles. These lower prices are known to appeal most to low-income consumers, who are also most at risk of NCD (Chandon & Wansink, 2012).

Furthermore, although the ratio for best versus worst value SKUs for cigarettes was comparatively low − 1.156 in wave 1 and 1.239 in wave 2 – because of the high tax-related cost of cigarettes in Australia, this still represents a significant saving. For example, in wave 2, the best value JPS Blue twin pack (2 × 23) offers a saving of 33.9 cents per cigarette compared to the 25 single pack, and 11 cents per cigarette compared to buying a 23 single pack.

However, such price promotions and volume discounts were not unique to unhealthy products. For example, the bottled water brand variant SKUs, also manufactured by Coca-Cola, were assigned among the most substantial volume discounts.

Consumer psychology perspectives

The rationale behind the widespread volume-based discounting observed in this study can partly be related to operant conditioning (Skinner, 1963), in which consumers are conditioned to purchase larger packs. Such conditioning is stronger when the per unit price difference between smaller and larger packs is greater. That is the consumer experiences greatest financial punishment for purchasing smaller amounts (high per unit price) and greatest reward for purchasing larger amounts (low per unit price); the regularity of this volume discount strategy habituates the learned behaviour. Larger purchase habit formation appears to be a key strategic goal for unhealthy brands. This is despite such purchases fuelling the NCD epidemic, with buying more equating to greater consumption, as pack optimisation research has revealed (Wansink, 1996). Such increased consumption is particularly concerning for unhealthy products, as these products are often addictive, reinforcing the habit-forming behaviour of larger purchases (e.g. Kessler, 2012).

In addition to operant conditioning, several other theories can potentially explain the attraction and effect of volume discounts. For example, one relates to the issue of anchoring (Wansink et al., 1998), where individuals are never certain of how many items to purchase. To make such decisions, they generally seek clues as to what number is ‘normal’, and then adjust only marginally from this norm. In line with this, widespread availability of large volumes often implies to consumers that the purchase of many items, such as 30 cans of carbonate or beer, is normal. Accordingly, consumers become more inclined to purchase larger numbers.

Other theories may explain why manufacturers are especially inclined to offer volume discounts for unhealthy products. For example, according to reinforcement sensitivity theory, some consumers are especially sensitive to rewards and insensitive to costs (Smillie et al., 2006). Such individuals are more inclined towards foods that are satisfying, such as unhealthy foods. They are also more inclined to respond favourably to volume discounts because they are not as sensitive to the drawbacks of volume discounts, such as waste.

Other research has also implied that promotions may be especially likely to encourage purchases of unhealthy products. Specifically, consistent with the theory that Metcalfe and Mischel (1999) proposed, immediate rewards such as special offers might elicit a cognitive system, known as the ‘hot system’, where individuals generally respond more impulsively and emotionally rather than rationally and carefully. Hence, the prospect of substantial discounts may elicit impulsive behaviour.

Furthermore, once individuals purchase a high volume of unhealthy items, such as multiple cans of beer, they are more likely to consume more of these items due to other key psychological tendencies. For example, consistent with the Weber-Fechner law (van der Helm, 2010), individuals cannot differentiate as easily between two large numbers as they can two small numbers (e.g. 18 and 20 seem more similar than two and four). To further illustrate the implications of this law, if someone with four cans has consumed two cans today, another two cans is likely to seem sizeable, and so they will probably refrain from further consumption. In contrast, if someone has consumed 18 cans over nine days, another two cans may seem trivial. Accordingly, as the volume of cans they purchase increases, inclination to consume another can amplifies.

Alternatively, the effects of volume purchases on consumption can be ascribed to the notion of resource scarcity (Roux et al., 2015). That is when resources are scarce, individuals tend to gravitate towards behaviours that advance their own welfare. They are more inclined to prioritise their immediate needs over the goals of other people and be frugal. Conversely, when resources are abundant, individuals are not as inclined to advance their own welfare, and may, for example, be more likely to donate money. Therefore, when individuals purchase a large volume of food or drink, resources seem abundant. They are less concerned about their welfare and may therefore engage in unhealthy excessive consumption behaviour.

Regulatory recommendations

To date, unhealthy product price promotions have largely been ignored by marketing regulations (Riesenberg et al., 2019). Table 4 presents the brand SKU marketing variables identified in this study that require attention, along with regulatory recommendations applicable to the range of unhealthy products.

Table 4. Regulatory recommendations for unhealthy product brand SKU price promotion.

Brand SKU marketing dimension	Impact (and example of substantiating research)	Regulatory recommendation
Prominent point-of-sale positioning and merchandising for promoted SKUs	Stimulates impulse purchase (Smillie et al., 2006) Overcomes healthier purchase intention (Metcalfe & Mischel, 1999)	Restrict point-of-sale merchandising and positioning
Large SKU range	Generates more sales than less differentiated products and provides greater opportunity to vary promotional offerings (Kotler et al., 2009)	Limit the size of brand SKU range
SKU differentiated price promotion/special offers	Stimulates sales and increases consumption of price-demand elastic products (Winston, 2014)	Ban brand SKU price promotions and ‘specials’
Dynamic and frequent SKU price promotion/special offers	Maintains increased sales and consumption by overcoming the declining impact of sales promotion over time (Maxwell et al., 2012)
Lower per unit/volume price for larger SKUs	Habituates larger purchase behaviour (Skinner, 1963) Increases consumption (Wansink, 1996) Maximises appeal to low-income consumers, most at risk of NCD (Chandon & Wansink, 2012)	Fixed per unit/volume price across the brand SKU range
Multipack promotion	More effective than single item promotions in increasing sales volumes (Drechsler et al., 2017) Normalisation of excessively large purchases (Wansink et al., 1998) Increases consumption (van der Helm, 2010) and excessive consumption (Roux et al., 2015)
Full SKU range presented with corresponding per unit/volume prices, often with adjacent best and worst value SKUs	Reinforces value seeking, larger purchase behaviour (Skinner, 1963) Capitalises on the price-demand elasticity of unhealthy products (Revoredo-Ghia et al., 2018)

Conclusion

Understanding how brand strategies increase consumption of unhealthy products is critical for improving marketing regulation and disease prevention. This study is one of the first to provide detailed insights into brand SKU portfolios across the range of unhealthy products and offers methodological guidance in this regard. The findings highlighted the common use of large SKU ranges, price promotion, volume discounting and point-of-sale merchandising. While this study’s comparison with non-harmful brands has shown that such initiatives are common across FMCGs, the dynamism and extent of the promotional effort is magnified in unhealthy brands and most often associated with larger pack sizes. Extant marketing research and consumer psychology theory confirm how such strategies drive larger purchase habit formation and excessive unhealthy product consumption. Unhealthy product marketing regulation must therefore consider restricting these as yet unregulated point-of-sale brand SKU dimensions.

Future research might address several limitations of this study. First, this research involved descriptive analysis of brand SKUs at two points in time to expose common, dynamic and persistent promotional strategies across unhealthy product categories. More continuous monitoring of brand SKUs should provide further insights and opportunity for significance and trend analysis. Second, data were collected from only one leading supermarket chain in central urban locations. Some studies have identified higher prices in remote locations for some food products (Chapman et al., 2014), but not other products like tobacco (Burton et al., 2014). Further research is therefore warranted across a wider range of channels in urban and rural locations. Third, this study investigated brand SKUs in Australia only. Although similar volume discounting strategies may be applied in other developed markets, the same manufacturers do not always practise volume discounting to the same extent in emerging markets. Future research might therefore investigate how manufacturers’ SKU portfolio strategies vary between developed and emerging markets. Fourth, volume discounts are so entrenched in Australian consumer psyche that regulating this practice risks backlash, with many consumers incorrectly believing that such regulation will increase household expenditure (Zorbas et al., 2019). Further research is therefore necessary to explore how to alleviate consumer concerns.

Finally, the importance of point-of-sale brand dimensions warrants their inclusion in future investigations to advance health-marketing theoretical frameworks. As illustration, researchers should include brand SKU marketing variables as a barrier in the Health Belief Model (Yap et al., 2021) to quantify their impact and inform preventative healthcare; incorporate them into sustainable consumption frameworks to explore their impact on responsible consumption, anticonsumption and mindful consumption (Lim, 2017); and investigate their impact on the intention-behaviour gap in relation to sustainable and healthier consumption (Lim & Weissmann, 2021).

Disclosure statement

No potential conflict of interest was reported by the authors.