When you shop, what entices you to make a purchase? Is it price, the style or make, excellent quality, or just because it is on promotion? In my observance, it seems as though promotions are the defining factor for sales. Gone are the days when you go into a business or store, ask for something and walk out with a purchase at full price.
The other day, I read the Cynical Girl’s post titled Free Stuff and started pondering what makes us tick as consumers. I am no different in that I love when I perceive a purchase as a
good great deal. What I want to know is how will companies survive if margins are cut so ridiculously low they no longer make money? After all, businesses (non-profits excluded here) exist to turn a profit or maximize shareholders’ wealth (thank you MBA classes for that one).
When I owned the bridal shop, I would offer 10% to 20% discounts to brides who purchased their entire wedding party ensemble from me. It was a thank you for their continued loyalty that allowed me to still pay the bills. It is not loyalty when people shop with the mindset that 30%, 40%, or 50% off a ticket is not enough. Soon, customers will ask you to pay them for taking product off your hands. Well, I might be going overboard with that thought, but the sentiment feels real enough.
Whose fault is it anyway that customers want promotions on everything? When the economy gets tough, retailers fear they will not be able to sell their inventory so they create promotions in order to drive traffic. No great surprise there. The problem is that they begin to stack promo’s on top of other promo’s and train the customer to wait for a promo to buy something.
Unfortunately,I don’t have the answer. Businesses must wean consumers from the ever-present promotions if they want to be able to raise profit margins. Perhaps instead of having a promotion every weekend, do it every two or three weeks. Another option is to begin pricing product with promotional prices in mind (higher markup). There has to be a way to engage the consumer without giving it away. Has your company figured out a way to avoid the age of over-promotion? Share your thoughts and/or ideas on the subject.