Can Marketers Kick The Price Promo Habit?

A colleague from P&G said it best: "One generation of marketers has addicted three generations of consumers to the heroin of price promotion."

That addiction has never been more obvious than today as we watch our mailboxes fill with 40, 50, 60%-off offers from nearly every name in the game. The short-term spin: Retailers need comp store sales growth. The longer-term implications? The retail universe will continue to devolve to "okay, available and cheap."

A woman walks into a retailer looking for a designer dress for a cocktail party in Las Vegas. She's offered Anna Sui and Calvin Klein; she loves both. The salesperson goes off to find the perfect accessories as the woman sits in the well-lighted dressing room. The salesperson returns with the receipt and the woman is aghast. It's half the amount she expected -- here's the punch line -- half what she wanted to spend. The salesperson had clipped store coupons, opened a charge account and pulled other sleights of hand to reduce the bill into her perception of submission. But the customer was upset that the salesperson "lied" to get the discounts -- lied to the store that is. She kept the merchandise but it ruined the experience.



The salesperson sliced her own commission, cut the retailer's profit, and by making assumptions, transformed a nascent relationship into an embarrassing financial transaction.

This denigration of the shopping experience happens everyday -- and not just for designer goods. The wholesale wholesaling of retail is the marker of an engine running on empty. We're taking shopping out of the process -- to go straight to buying -- but physical retailers can't compete with the efficiency of the Internet regarding buying.

How do we kick our addiction to price promotion? We must focus on the shopping (not buying) process, enhancing, entrancing, and engaging customers and salespeople in the dance.

1. Retailer, hire fashionista/passionistas.

Instead of training salespeople how to up-sell, hire passionistas who are genuinely excited about the merchandise. Research we conducted for Passion Brands shows that their avocation is their vocation. Rather than hire people based on affordability, how about because they read Vogue and Glamour, are obsessed by "Project Runway" and come to us with a million ideas for in-store make-overs and fashion shows? Genuinely fashion-involved people are creative -- let them be.

2. Brand the experience, differentiate on style and design.

The most salient emotional benefit of shopping is that "lucky" feeling. We can empathize with retailers who resort to the short cut of price promotion to elicit the "lucky" response. However, the folks who work more creatively to prompt the "I'm lucky I found it" reaction through enhanced shopping experiences win social and financial capital. When improved margins, share gain and loyalty are the key metrics, retailer and shopper forge winning strategies through which each feels lucky.

Of course, every so often a sale can generate genuine luck. A great example is the semi-annual sale at Pink. Suddenly you see people all over carrying Pink Sale bags. No other advertising is required as you're aware in the most aspirational way that this savvy store is having a sale.

3. Change the tone, acknowledge the customer knows the economy is challenging.

"Buyers days" and "white sales" are old school marketing -- like nothing is going on that has every retailer panicked. That's goofy.

I tell clients there is no unfocused group person left in the world. Stephen Brown (University of Ulster) says, "Marketers know about consumers, consumers know about marketers, marketers know consumers know about marketers, consumers know marketers know consumers know about marketers."

That being the case, marketers need to acknowledge it. Customers don't want to pay more than someone else. Why not have an "end of the quarter, we have to make our numbers, you have to do your part" sale? Make it fun, festive and fearless in trusting the customer. Hold it after regular business hours, serve snacks and umbrella drinks; engage your best customers.

Customers want a unique proposition. When we offer that through service and support, or any of a hundred valid means, we de-average price. Then the challenge becomes to authentically explain why we're doing it and, when we do, "Today only! Free shipping!" will cease to the only workable mantra.

4 comments about "Can Marketers Kick The Price Promo Habit? ".
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  1. David Chu from Eton Corporation, August 19, 2009 at 12:08 p.m.

    Paula, I would challenge you to open up your mind. I've been to plenty of boutique stores where the "low end" salespeople were incredibly energetic and got me to empty out my wallet.

    There are 'passionistas' out there, but what this article doesn't touch on is how to attract and retain 'passionistas'. Just like customers, 'passionistas' want a unique value proposition for why they should expend their creative energy. If you can't compete on wages, then sell them on the experience they will gain. Sell them on what they will learn. Sell them on the fact that they will be able to try out their ideas. Sell them and then follow through.

    Of course there is a trade off in unleashing 'passionistas.' You have to be willing to take risks since they will always want to push the limits of everything. You have to be willing to change. Most of all, you have to be willing to challenge your own assumptions and be open to their ideas.

    Hope this helps somebody out there.


  2. Mickey Lonchar from Quisenberry, August 19, 2009 at 5:19 p.m.

    Kate, as always it's a pleasure to read your posts.

    Your analogy of discounting being a "drug" holds more truth than we might care to admit. Price promotion is the ultimate in short-term thinking. As a tactic, it might help achieve an immediate need, i.e. build traffic, steal market share, fend off new competitors. But the question for marketers to ask is, what happens when I try to return to my normal margins? Will I be willing to live with the inevitable churn-out when prices go up? The price/value equation gets thrown out of whack. Consumers have long memories. And if marketers are intent on discounting in the short run, they need to think ahead to how they will add more value once the discounting ends.

  3. Paula Lynn from Who Else Unlimited, August 19, 2009 at 11:04 p.m.


    I guarantee I have dealt with more fashion stores both as a consumer and as ad seller. Plenty of stories. I listened and knew their stories professionally and personally. Fashionistas' passions cool when they can't afford to buy the stuff they are selling. High turnover and personal shoppers who are on commission on the $20,000 per person on a shopping day a few times a week reach a comparatively low percentage. You are seeing it from only a part of the prism. And maybe you just flatter easily.

  4. Kim Barrington from the kimbro agency, August 19, 2009 at 11:58 p.m.

    How about giving those Passionista's some decent merchandise to work with?

    The shoe people are doing okay right?

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