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When Marketing Your Business Don't Discount, Add Value!

Phil Roberts - Tuesday, January 10, 2012

In a recent article in the NZ Herald, I read with interest the difficulties a major cereal brand was experiencing as customers were no longer buying their products.

Since the recession hit, this brand had been discounting their prices so as to be regularly offered "on special" in supermarkets. Products sold well.

2 years on the brand decided that the worst was over. They gently returned to selling their product at the normal price. Sales plummeted.

Why, when they were a well-established, trusted brand, well known to New Zealanders had they seemingly fallen out of favour with their buying public? Answer: a shift in the value perception of their target audience.

I returned to a business book recently to read "if there's one thing you remember from reading this book it is to NOT DISCOUNT but to ADD VALUE!"

Its obvious really: if your business continually offers discounts then over time your customers believe the discounted price to be the norm – and simply won't pay more. Your margins will suffer from constant discounting and products won't sell unless they are discounted.

The cereal brand found as a result of discounting their customers were now only buying if the product was "on special". If it was not, then they bought a competing brand at the price point they had become used to paying. The road out of this predicament is both costly and long. It will be years (perhaps generations) before this brand can return to its Recommended Retail Price.

For as long as I can remember there's always been a sale on at Briscoes. When I go there I don't expect to pay full price for anything. Do you?

Discounters beware, you have more to offer than price slashes and so much more to lose.

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