Suze Bragg

Running a price campaign
July 1, 2008

Promotional pricing can be used to encourage brand loyalty and increase customers.  It can be used to win market share and introduce a new product (you've all heard of introductory prices). This marketing technique can also be used when trying to win/gain market share from your competition (keep in mind, if it compromises your profit margin, it's best to stick with your brand and win with your brand integrity). 

When should you run a price campaign?
1.  when launching a new product:  you've got new merchandise in the store and are trying to move out the old, or you want to introduce a new product to your audience

2.  in attempts at winning business away from the competition:  they're selling it at a reduced price and you cannot compete (especially in today's market when people are saying they're choose lower prices over quality)

3.  when entering into new market sectors:  if you are trying out a new sector and want people to stop and pay attention, having lower prices than the competitors helps

4.  when developing a niche market

5.  protecting your market share: if your competitors are undercutting you, it's a good idea to join them in the price drop game to keep your current customers

6.  protecting your volume and profit in mature markets:  same as above

There are 5 types of pricing strategies to choose from:
1.  money off next purchase
2.  more product for the same price
3.  discounts on multiple purchases
4.  cash back offers
5.  money off of current purchase

Keep in mind the following:
1. Don't get caught in a price war:  people switch back and forth, but will stay with someone the longest if they have good products, good customer service and meet their needs...regardless of pricing.

2. Don't administer difficult promotions; 10% off as your first purchase, as opposed to 10% off if you buy 4 items in the next 3 weeks

3. Don't run promotions that are difficult for the public to understand:  anything that makes your customer jump through hoops makes them angry:  mail-in rebates from the original box, mailing in anything to get coupons in return, etc.  Three simple words: don't.do.this.

4. Don't rely on price as the only competitive weapon:  in the long run, aim for customer loyalty and excellent customer service. Build your brand identity. Long price wars will erode your profit margin and will inevitably harm your bottom line. 

Posted by Suze Bragg on July 1, 2008 | Comments (0)