Latest posts by Jessica Beauchamp (see all)
- Weekend Words of Wisdom | Do Things Need to Change? | #18 - September 2, 2018
- Weekend Words of Wisdom | Learn to not spread yourself out too thin | #17 - July 29, 2018
- Weekend Words of Wisdom | Just do it | #16 - July 15, 2018
Sales, Coupons, Discounts…we all have heard of them, and we all have participated in them in one way or another.
Why do we love sales and discounts so much?
The answer is simple, in fact. It’s purely psychological – we all want to receive items at the lowest available price.
What is it about sales that drive consumers?
It’s within our innate psychological make-up to break things down mathematically and desire something more when offered at a perceived lower price because we feel a sense of accomplishment in obtaining something at a discounted price than what it is normally priced at. I would like to note that I state perceived because discounts are often in place for retailers benefits – not a consumer’s (at least in as much of a gain). This being the case they are there to drive the sales of a particular product or service up.
For example, this may mean that a product is offered for sale, but the discount only applies to the smaller version when the consumer purchases two. This discount is a “$0.50 off coupon when you purchase two of the smaller sizes”. Let’s say that the regular price of each is $2.00 so for a grand total of the quantity of the smaller items combined, this costs the consumer $3.50 instead of $4.00. But wait, this product is offered in a larger size, which the coupon does not apply towards. The total quantity of the larger sized item of the same product costs $3.40 and there is 18oz. more of the product in this item. This seems like the better deal, but which one is most likely to experience an uptick in sales? The smaller size because it appears more cost efficient and the consumer is receiving two items versus one. This is what is meant by saying that sales and discounts often benefit the retailer more than they do the consumer.
If you’re interested in learning more about the exploitation of consumers then check out The Economist‘ article titled ‘Something Doesn’t Add Up’.
What are the best and not so best sales to use?
This is a challenge of a question because it really depends on several variables. Variable number 1) what is your product or service? Variable number 2) Who is your target audience? The answers to these will directly impact the type of sales and discounts that your company performs well with.
However, with that being said, some of the more popular and well-received sales are percentages off (make it worthwhile) and free shipping, if applicable.
Is it possible to overuse sales?
Yes, absolutely! Think about the .99cent store – it’s a perma-sale. Do you want to represent your brand as a perma-sale? If so, then by all means utilize all of the sales strategies possible and rake in that dough, penny by penny, but if, like many, you do not want to be or your customer is not the same customer then do not overuse sales. If there is always a sale to be had then what is the incentive for the consumer to jump in on “this super awesome and never before seen again deal” now if they know that they can purchase the item listed for sale at a similar discounted price in the future at a time more convenient for them. The purpose of sale coupons is to create a sense of urgency, develop a drive for the buy it now, and create a momentum of sales. The opposite happens when sales coupons become overused as consumers begin to expect them (think about the average Joanns customer). This also devalues your product because it cheapens the price that is there in place for a reason. The point is to attract the proper consumer and if your market is not the heavy coupon clipping crowd then my point is, that you should not overuse your coupons year-round just to drive sales. Market your product to drive sales and the customers will come. Coupons and discounts should be applied in special circumstances, because they are – you should make them feel like a gift by not handing them out left and right all of the time, but rather only a few special times during the year – think major holiday shopping times, to repeat customers, and for birthdays. This way it’s special but not overdone.
Want to learn more about sales and discounts? Then check out ‘The Psychology of Discounts’ by Michiel Heijmens on Yoast.
Or, if you’re like me and like books, then check out some of these great pricing strategy and sales book resources here:
- “Pricing Strategy” by Tim Smith
- “The Price Advantage” by Walter L. Baker
- “Confessions of the Pricing Man” by Hermann Simon
- “The Strategy and Tactics of Pricing” by Thomas Nagle
- “No B.S. Price Strategy” by Dan S. Kennedy
- “Pricing Strategy: How to Price a Product” by Bill McFarlane
- “Pricing for Profit” by Peter Hill
- “Pricing Strategy: An Interdisciplinary Approach” by Morris Engelson
And finally, the grand finale! After all of this, I would like to make an announcement: We are extending our sale for 3 weeks!
Why? Because frankly put, our product section is a little lacking and we want to make sure that you have the opportunity to take advantage of this exciting time with us by being able to enjoy the new products that will be released in the coming week!
P.S. We will not be offering many sales throughout the year, so trully take advantage of this NOW!