A price cut is very easy to do, but is hard to undo. A special offer allows you to temporally discount your product in order to increase sales, while still maintaining the list price at its old level. When the offer ends, the list price is the same – you haven’t permanently given anything away.
- When your reason to cut prices is a short term one, like wanting to counter a competitors special offer or respond to a new product introduction.
- When you want to experiment with the price (when you want to find out if the customer is price sensitive) without having to cut the price blind and without real data.
- When you want to stimulate your customers or try new products or service and you firmly believe your product or service will hit the customer and you’re sure they’ll buy again at your list price.
- When your list price needs to stay high in order to signal quality, or be consistent with other prices in your entire product line.
- The most common is when your competitor are beating you based on pricing and you do not have any other option than to do the same..
Sometimes competitor play dirty and make such heavy use of special offers that consumers begin to expect them all the time and wait for an offer before they buy. These competitors effectively damage the industry because customers are no longer willing to buy at list price and assume they won’t ever have to.
If this situation happen in your industry contact us, we may help you overcome the situation and pull you out of this price war that will end in a lose-lose-lose situation. Yes, you, your customer, and your competitor will lose because the customer will not be able to enjoy your product or service and you guys will end up closing the business because it is no longer profitable.
When competitors get too focused in making and matching each other’s special offers, they flood their customers with price-based promotions. Discounts and other tactics begin to outweigh brand-building marketing messages, focusing consumer attention in price rather than brand and benefit consideration. Special offers attract price switches, people who aren’t loyal to any brand but just shop on basis of price. Special offers are easy to create but some customers are trapped and they face sabotaging their brand. It leads to reduction in customer loyalty and loss of profits. Be careful and feel free to contact us for your next special offer campaign.