Sales, special offers, cost-cutting, low prices.
We’ve become accustomed to paying as little as possible in return for as much as we can – but should all brands follow suit? Here we look at whether dropping your prices is always necessary, and what you can offer your customers instead of discounts.
Do you need to reduce your prices?
Do your customers expect to pay less for your product? Would they be happy paying full price? A financial investment firm recently offered zero account management fees, and saw almost no uptake of the offer. Their audience simply didn’t trust them – they wanted to pay for their expertise. They wanted their money and their investment sitting in the safe hands of someone who knew what they were doing with it – and that came at a price that they were willing to pay for.
“Sales are normal for retail”
Not necessarily. Take Apple, for example. They don’t host sales instore and they don’t partake in Black Friday. They know their brand’s worth and are confident in their products – or rather, they’re confident in the price their audience are willing to pay, and how long they’re willing to queue for them. In 2018 we saw an average 20% price increase across all Apple products compared to 2017, and in 2019 the iPhone 11 Pro Max cost £1,149 (mostly thanks to the £ being so weak – in the US it cost the equivalent of around £855, meaning that if you found some bargain flights you could enjoy both a new phone and some cherished memories). And yet the phone outperformed expectations, and retailers had to order in higher volumes of stock than predicted.
On the flipside there are brands who are perpetually on sale; Sports Direct, DFS, Mountain Warehouse. You never expect to pay full price for their products. Do these discounts de-value their brand? Not necessarily, but it might water down the value of their products.
Would your customers be happy paying a higher price?
Nestlé recently launched an exclusive £14 bespoke limited edition KitKat, offering customers the chance to create their own eight-finger alternative out of a choice of 1,500 flavour combinations. Whilst this might be a unique product, you’ll find customers soon become committed to the kind of shopping experience they’re looking for – at a price they’re happy to pay. Whole Foods made the move over to the UK in 2007, and whilst it hasn’t always been smooth sailing over the 10+ years they’ve been here, the US chain successfully brought us a luxury supermarket shopping experience, and customers have bought into their perfect produce, stacks of organic cheese, gallons of olive oil and sky high prices – even for branded products.
With so many ‘middle of the road’ brands going under – Thomas Cook perhaps being a good example, Dorothy Perkins, Burton, Toys R Us, and Pizza Express being a near-miss – if you’re not offering anything that your competitors aren’t already doing (on or offline) and your prices don’t reflect either a premium product or experience or a bargain, what are you offering shoppers?
Don’t be afraid of your premium price tag. We meet a lot of brands who try and reduce costs because they believe that customers want to pay less. Turn this theory on its head and think about what added value you’re bringing them. What problem are you solving, how much time are you saving them, what other value that has no monetary attribution are you giving back to them? As we approach Christmas, are you saving them shopping time?
We offer free PPC and SEO health check audits to look at what can be done to improve your results. Make sure your brand is found online, and your customers know about your exceptional products at the right time – it’s especially important in the run-up to Black Friday and Christmas.