There are certain products that you know, cost what they cost. Let’s use Apple as an example, if you want a MacBook Pro you pay what’s on the price tag. And there is no point waiting for Christmas sales or the next model to come out, for as long as that product is available it is going to be that price.
Now, what about your favourite clothing brand? Let’s use Country Road as an example (Men, woman and children clothes, covers most of the bases). You can certainly pay full price for new season stock, or you can wait for a Spend and Save, a 25% off promotion, even an end of season sale. I mean it is undoubtably considered good marketing to maximise profitability of a product by dropping prices when a product is coming to the end of its life cycle. However, what about when budgets are looking like they might not be met, or a competitor is going hard on their own promotions; a sale promotion is a silver bullet solution that will bring in some much needed sales. But what does this do to the perception of the brand, and the behaviour of the customer.
My co-workers and I are pretty loyal Country Rd customers, but can I tell you not one of us would pay full price. We aren’t price sensitive, we just know that next week there is going to be some sort of promotion…and that means we can get that extra top we have been eyeing off! Plus there is the old fear of missing out…what if I buy today and it goes on sale tomorrow!?!? I mean chances are it will. Has Country Road decreased the value of their brand by running more than just the end of season sales?
In contrast, when a new Apple product is released there is no waiting for a sale. You just take yourself down the store and buy with confidence, knowing that you aren’t missing out on an upcoming promotion. Looking within the same category, if you were in the market for a Toshiba or Dell computer would you search for the best deal? I would hazard a guess and say yes. Is this how Apple has created such consistent demand for their product by making the statement ‘we believe in our product, and don’t need to discount it’.
So what does discounting do to the perception of the brand in the customers mind? What does that mean for the way the customer behaves when purchasing the product? Are you discounting the product or discounting the brand?
If Country Road was to drop their everyday prices would they get more sales, or would sales drop because their customers aren’t getting that special feeling from picking up a good deal on an aspirational brand. Would Apple maintain their monopoly if they discounted their product, or would they increase market share by becoming accessible to other segments of the market? For us promotions certainly have their place and are a valuable tool for positioning a brand or making the most of a products life cycle. However like any tool, if you don’t know how to use it you might just do yourself some damage.
What about you, do you wait for sales? Do you feel cheated when you by something and it goes on sale the next week? Does a brand that doesn’t give discounts give you more confidence in your purchase?