An important read for all retailers today. Sales discounting — when to use and when not to use or when it is too much and damaging to brand.
Excerpt: It’s a tough world for retailers. New technologies enabling consumers to compare products and prices online have permanently changed the in-store shopping experience. Meanwhile, a sluggish economy and rising competition are testing consumers’ brand loyalty. Many retailers are responding with price promotions in a bid to keep people coming through the doors. But this short-term fix often exacerbates the very problems retailers aim to remedy. Over time, promotions train consumers to buy only when there’s a sale, and each new round of discounts must be deeper than the last to get their attention. As prices fall, margins suffer. Any incremental revenue gains from promotions eventually shrink as the sale sign becomes a fixture in store windows. Most troubling is the long-term damage to a retailer’s brand when consumers come to see it as a place that always has sales.
In short, the overuse of promotions can become an addictive behavior that can deeply damage a company’s brand identity. Yet a drastic change to eliminate promotions is not the answer:
Read full article via Kicking the Sales Promotion Habit. From Strategy + Business — Booz & Co.