PRICE & PROMOTION - 2 of the 4 'P's to think about this season
By now you know that Product Place Price & Promotion are the core 4 'Ps' comprising the marketing discipline. But 'tis the season of sales and peak consumerism, so let's focus on the latter 2...
It’s the most wonderful time of the year. Ho ho ho! Happy Hannukah!
Obviously these are notable terms or ‘brand assets’ of Christmas, the paragon of consumerism and the Q4 marketing planners’ biggest opportunity and headache.
But before the main course of December we all know of the impending amuse bouche of sales times that has just grown mad in recent years - Black Friday. Not just a Friday but a week. We know it is coming. Finished with Cyber Monday (which invariably gets magically/desperately extended until the following Sunday). Varying research points to this; 2023’s retail figures are likely to see net-similar sales numbers to last year based on your source, but it will be interesting to see if it dips given the climate. Predictions aren’t my point here though, but principles combined with reality are.
The challenge of 2023 to consider.
Despite the fundamentals we know and discuss, it is important to view this particular topic through the lens of the current culture and economy. One of global distress, soaring rates and diminishing cashflow with a cost of living crisis. Some notable points; inflation has increased. lending mortgage debt is more expensive than salary increases, and as a result consumer spending/frivolity inevitably suffers. People downgrading from luxury range to basics in the supermarkets. Less desired spending on nice to haves, with discount events enabling a window to buy cheaper essentials rather than luxuries. This isn’t necessarily new, but this is a gradual line curve towards such Darwinian consumption.
Also to reiterate, we know they are coming. They are advertised, predicted. You & I know the events. Prime. Black Friday. January Sale. I need a new kettle for new house, I’ll wait for this weekend. I need to fly over the pond in the new year, I know BA will come through for me in the January Sale.
Therefore, let’s use this month’s Front of Mind to think about 2 of the more obvious comms manoeuvres in the Ps. Price and Promotion. If you are going to flex these 2 muscles, now is a good time to revisit. But not doing is also doing something, it is a strategy, a choice. Assuming a foundation for the purpose of this of a developed Product position in market with clear Place and distribution as standard. I am assuming the anomaly of the season and focus of sale promotion, events and so forth and the typical levers used to get this, but not necessarily correctly.
We are not advocating for advertising only short-termism, nor diminishing the value of the development of Product and the designation of Place, these are key strategic levers that are evergreen go-to-market considerations and action and should be treated as a strategically placed constant amongst all the other stuff.
PRICE - the lever to be pulled carefully - if at all.
Price is a strategy, how you price and at what point etc - it sets the tone and the position. Discounting however is a tactic, and a small part of the pricing toolkit. Queue behaviour change psychologist and lecturer Robert Cialdini :
“Pricing is such an important signifier”, says Cialdini, “that organisations will sometimes raise their prices and as a consequence, will be seen as the quality leader in their market, regardless of whether they’ve upgraded their offering”
Apple is often cited as an example: they never drop their prices and they grow sales and profit. But most of us aren’t them. Still, knowing the product and confidence of positioning in relation to competitors enables you to confidently not discount or discount. Rarer discounts may feel special to certain buyers, a less-is-more scarcity mentality. On the other hand, I always cite Pizza Express here in the UK as a discounting brand (has anyone ever paid full price and not used one of the abundant vouchers for their Pollo Ad Astra with Doughballs?). They nearly went into administration, and eventually survived. But the fact remains, they remain a brand in my head I assume that will always have a deal or available voucher for!
However the challenge is, through seeing what hundreds of other brands’ tactics do and so often fail at, price promotion (a different thing to the separate tenets) is synonymous with discounting and such events. But no. Not discounting for Black Friday may be a strategy, a flex, a reinforcement of the cachet. Because studies have shown that people have bigger basket value in sales periods, and some of that stuff isn’t necessarily discounted. So consider other options, and always human psychology. Highlight prices, albeit unchanged, in a sales period in context of the event, maybe offer value adds, Free delivery etc. There are other options, to increase revenue but capture peak intent.
PROMOTION - the advertising and call-to-action basically, but test
To reiterate, PRICE and PROMOTION are not to be confused with ‘Price Promotion’, a semantic difference for a sale/discounting events. It is the type of advertising that proliferates. From now until Christmas, it becomes the battle of the big swinging brands and their glorious brand films for share of voice. As well as the pithier, unsexier response-driving adverts for sale events, discounts, and time limited offers. Then you get January sales, originally synonymous with clearing out excess Christmas production. The challenge of course is - what is incremental?
I would suggest this point, you should always Promote (advertise) where you possibly can in this sales period. Be part of the conversation and share of voice and mind in consideration periods. It’s like the rest of the year but on steroids. If others up their budget (we know they will) and you keep yours the same, you inevitably lose %ge . So worst case, be present. Just by being visible and using the right creative nudges in the time of peak consumerism, you can shortcut to the consumer mindset of assumption of good value, discount or not.
However, reassuringly for some of you, you may not need to do anything to the price and already have it right, and therefore not have to do a Price Promotion. By all means, test it to a less engaged portion of your email base, or for a launch/Beta product; a discounted sale is better than no sale by default for the less engaged. This segmentation is important, as it is the self cannibalisation to be wary of. Don’t necessarily barter with yourself and your margins, let the market do that for you! It is not always easy when everyone around you does it, and in particular without solid measurement, but some people were going to buy your product anyway without the need to discount. But they do need to at least KNOW about it in a time where the average buyer mindset is at saturation point of messages. It is about being present in those moments. Advertising (Promotion) yes, but not necessarily advertising said price promotion. Furthermore, with the insights of people thinking about necessity buying in predicted periods they know of, think how the mundane stuff can be highlighted. 2023 may be the time to promote some more essential stuff. Kettles not air-fryers.
SIDESTEP - What I learnt from Affiliate Advertising
An often misunderstood industry, channel and my entry point into media and marketing in what feels like a lifetime ago. An atypical journey, but I’ll die on the hill that it was an educational grounder of performance, data, life time value, tracking, and brand equity. Given the fact that publishers have incentive to get it right as they typically only get paid on sale as a percentage, they have to be super cute with context and placement and relevance, especially if without a cast iron price incentive of the the big affiliates like cashback, voucher and comparison sites. If a luxury or rather premium-plus brand wish to grow via such customer acquisition, they need to consider the way to utilise price. For example, I am sure we all know a subscription service where it is 2-3 months free through this or that link, but the Customer Lifetime Value (CLV) often shows that it is an expensive acquisition, i.e. cancellation on day 29 of the free trial increases on those conversions acquired by such communications.
Context is everything for retail. You can increase or decrease brand perception and sales by how you promote. 1. Don’t be on those sites and 2. If you want to maintain your premium and drive increased Average Order Value (AOV) then you may be wise to offer Free or Next Day delivery for over £X, or an associated experience/event invite. Therefore the brand is not diminished in terms of perception of value or cost, but an improvement in the commerce experience further has the the more desirable effect of enhancing the brand perception - whilst not decaying the bottom line!
FINAL THOUGHTS - what goes out there now may come back to haunt
I want to caveat that a lot of the areas above you will consider and use/review will be highly dependant on facets such as category, your position in market, size, pricing power, production capability and so forth. Also B2B/service companies would typically shy away from such a thing if time is currency and demand exceeds supply.
But the fundamentals. You will be known for things. People wait until certain events. Because we know the cadences of these things, and per the headline picture, they put it on your radar as a brand campaign in itself. (Amazon incidentally are the biggest eCommerce site there is, yet even that isn’t their profit centre; their Ads and Cloud Businesses are). The savvy cost-conscious-by-necessity consumer knows to buy in certain windows, even if the window does not have the offers. Think about that. Think a little more about who is buying and a little less about who is selling and what they are doing. Price may not need changing, it may just be ensuring you Promote. Price Promotion and discounting are a choices, and could be your answer for excess stock or essentials. And of course, have Products in Place that can be bought physically. Just don’t become the ones who always do the vouchers, pizza or not! Good luck the next few weeks, both in the day job and out!
SA
P.S Thanks for support from a lovely community of marketers who’s conversation supported anecdotes and sources for this article. Particularly JP Castlin on some guidance on micro buying factors too. Ps check out his newsletter if you have not already.
P.P.S. I really hope you are getting a semblance of value out of this. If so, and you think any other marketer or business owner would, feel free to share/forward this to them. Also, follow me on LinkedIn, The place formerly known as Twitter or even my company page. If you want to discuss working together, or simply something I’ve said, drop me a line. Thanks and happy reading/marketing!