The UK’s Institute of Practitioners in Advertising (IPA) published a statement today supporting the Grocery Supply Code of Practice. The code aims to deter retailers in the UK from forcing brands to slash prices to damaging levels.

As the financial squeeze continues to shape consumers’ expectations and buying habits, the IPA is concerned that brands may be suffering unfairly. While retailers lean on advertisers to keep prices down, shoppers too are anxious not to pay over the odds.

Price promotions have been an obvious weapon for advertisers during the 2008-2009 recession. A spokesman for the Institute of Sales Promotion (ISP) noted that the proportion of goods sold at discounted prices in the UK rose by 25% in 2009, and reached a value of £14 billion ($22.3 billion) in the month of November.

The ISP also noted that 70% of sales directors polled recently said they expected significant discounting to continue in the near future.

But the IPA’s October 2009 report, “Pricing for the upturn: How can brands fight back?” argued that advertisers and their brands could suffer long-term damage if they depended too much on discounts to attract shoppers.

The IPA had already explored the potential impact of discounting in an earlier report, “Price promotion during the downturn: shrewd or crude?” Data collected for that study indicated that price promotions eroded consumer loyalty toward brands.

The WARC’s coverage of the later IPA report also discusses further implications for advertisers. Worth a look.