Your discount pricing strategy and how to gain sales without giving away your precious margin. Plus, drawing customers in
When is the best time to discount?
When the stock is out of season, out of date, or out of style and you need to clear your inventory discounting can work.
Of course, everyone loves a bargain or a perceived great deal that would not normally be available.
Therefore some discounting is OK however the general trend to increase sales by having a season sale is hurting retailers.
As consumers, we are increasingly aware that if we wait a week we will get a discount. The thought of paying retail prices has long gone and we now shop on price because the options are everywhere.
Online shopping has contributed to this and drawn many of the walking trade away with easy offers.
Retail outlets are starting to wake up
It is interesting to watch the change in attitude to persistent sales and customer incentives.
In the past, we could simply say that the competition was 10% less than what you had in your hand. The assistant would go weak in the knees and drop the price by that margin. After all, you are ready to buy so why let you go elsewhere?
Things have changed. The new thing is for them to check the website of the competitor and only match their offer if it is cheaper.
This has trapped me in two different industries in the past weeks. I float a price and my comments are checked.
The retailers have woken up. let's face it they do their online shopping before setting a price. This has increased their margins because they are virtually price-fixing.
Furthermore, the discount companies like Best Buy, Catch of the Day, etc are exempted from the plan because they offer no backup service or proper warranties.
I recently claimed a warranty on a FitBit watch, I needed to supply a purchase receipt from a recognized outlet or there was no warranty. This supports the above statement.
Your discount pricing strategy includes value
Value has returned to marketing
The companies that have a new sale every week have become recognized as just providing door bait. Great prices on a hand full of low-value items and the rest at retail. They know you will buy a full-priced product because you are there and packaging and customer service will fulfill the role.
The online shopping phenomena took the world by storm during early Covid. But has it lost some of its luster?
Freight costs have risen with the demand so extra overheads are added to the margin and companies are starting to backpedal on freight, particularly on returned items. You buy a pair of Jeans at a great price but the size is wrong. No worries just send them back and pay the postage of $10. Now your jeans aren't such good value.
Now is the time for incentive marketing
It may not have entered your marketing brain yet but this is where the big returns are coming.
McDonald's gives the kids a toy when they buy a meal. They don't discount they give away a two-cent gift that drives the parents in.
The Coles Supermarket chain introduces value gifts obtained with a level of spend. The last was miniature plastic food items given free with a certain value spent. Shoppers wanted a full collection so they returned every week and bought more to get the two-cent gifts.
It worked a treat, retail sales went up and profits increased so wait for the next great idea.
The cereal manufacturers do this as well with toys in the Coco pops style marketing.
Online marketing does it well
Many times you will be tempted to buy a virtual product that has a reasonably small cost however they will throw in three bonus programs as an incentive. These are all their old products that are no longer front-line items but have a perceived value.
I am not a fan of this however it must work for the masses.
Your discount pricing strategy and the black Friday Phenomena
Plan your discounting when it is essential
There has developed, across many industries, the Selling cyclone called BlackFriday. This is a week-long period of intense discounting that happens right across the world.
This has been added to Easter sales and Christmas sales however taken a far more demanding position.
Major industries will do a large part of their annual sales during Black Friday week. Yes they discount like crazy
and margins diminish but turnover makes a great return possible.
If you are in an industry that attracts Black Friday shoppers you have little choice but to go head-to-head with the market. That is why your discount strategy is formed early in the year. Drag them in for this week and leave the rest of the year alone.
At Wealthy Affiliate, we are indeed guilty of a nearly 60% discount during this week. The offer is unbelievable and is taken up by many at the time. However, it is conditional on an annual term payment so many can't afford it.
When loyalty works better than a sale
It has been recognized that the cost of a returning customer is far less than attracting a new one.
You spend a heap of money on marketing to bring people in but very little on bringing them back.
Thus rewarding the returning customer should be a consideration. You have obtained their trust so work at keeping it by rewarding them in some way. It may be a Loyalty card, an extra discount, a free gift with special wrapping, or anything to make them feel wanted.
You will have a purse or wallet full of cards given out by the major operators. They do this because it works and brings you back into the store time and time again.
Conclusion
We have moved on from discount marketing
Think of discounting as a past marketing exercise that has now been replaced by value. Maintaining margins has become the new priority as we recognize that cutting profit does not work.
