Mediocre is the impression given by too much emphasis on price.
Business leaders too often use price and other related promotions that discount their products and services as a short term fix to bring customers back, and/or as a means to introduce new customers to the franchise. But the long term impression created by such tactics are negative and difficult to recover from, especially, when a low inflation environment makes it difficult to ever increase prices.
Price becomes a crutch to compensate for poor execution.
In the long run people don’t buy mediocrity. If you get something you think is so so for less then it isn’t really a value. You’re sure to lose customers, and profitability.
Execution of quality, service, experience, and product trumps all else. If a customer is delighted with your offer, price is never the issue.
The aggressive deal promotions of Jos. Bank, acquired by Men’s Wearhouse, was recently satirized in this Saturday Night Live Sketch entitled “Quantity Guaranteed”. An embarrassing portrayal of a long time brand that tries too hard to woo customers on price, and instead drives a perception of mediocre quality.
Jos. Bank’s CEO Doug Ewert, who is leading a turn around of the company, says:
“There’s a fair amount of evidence out there that there aren’t enough customers who want to buy four suits at a time or want to buy that quantity to get a deal,” he said. “Taking away the unnatural quantity discounts will lead to more healthy transactions. Instead of a guy buying four suits and then we don’t hear from him for quite a while, we can sell him a suit and shirts and ties and maybe some shoes.”
Promotions, including price offers, need to adhere to an understanding of what draws consumer behavior to your brand franchise.
Calibrate promotions to deliver value, e.g., buy this item and try this related product for a bit more. Understand if as a business you’re trying to get a new user to try your offer, or are you attempting to stimulate among loyal users greater frequency of usage/consumption, or induce consumers to try a new product, e.g., ‘ if you like this product, you might also like this from us…’
These are examples of strategies that will direct the types of tactics to employ to profitably grow your business. Price discounts should be the last tactic to use; especially if your execution and product is faltering and your brand is ho hum to the consumer.
Peter Klinge, Jr.