Notice all the price cutting and special offers during our economic tsunami? Seems that many brands decided that in order to increase
brand profitability, they needed to slash prices. Well, a recent study with marketing professionals noted that this price-slash practice is having a negative impact on profits. Even with deep discount, merchants are experiencing less than stellar sales.
Why are we surprised by this? During good times, price discounts typically have a positive impact because consumers have more discretionary income. Offer a product at a special price and they’ll shop at your store AND buy other items. But with limited discretionary dollars, low price doesn’t have the same impact. They’ll buy the discounted product but don’t expect their loyalty. As soon as the economy turns around, they’ll be gone.
Surely, there is a better way to manage your brand. Let’s go back to the basics.
1. Get focused. The best brands have clarity about who they are and what they provide. If you don’t know what you stand for, or the value your brand provides, you can easily fall into the discounting trap.
2. Look more closely at your portfolio. Is this the time to add a lower priced item? Consider a recent strategy by Quiznos. They aren’t discounting their existing menu items, rather they created new items that are smaller in size (proving that everything doesn’t have to be super-sized) and offered at a lower priced. If you want the standard menu items, they’re still there at the same price.
3. Emphasize benefits, not price. This is difficult to do in our commoditized world, but try to find those nuggets that differentiate your brand personality from your competitors, and exploit them. Consumers already think about the money they have to spend – give them something else to think about instead.
Don’t play the price slashing game. It’s not a sustainable brand strategy. It’s a quick hit with little to show after it’s taken away.
