There is a lot of concern in the retail markets regarding this year’s holiday shopping volume. In response retailers offered deep discounts to reel in shoppers. Now the question becomes, can retailers survive this economic downturn without resorting to deep discounts? To answer it, we asked our own Justin Downey to give us a few big ideas regarding marketing in a down economy—sans discounts. Here are his thoughts:
Sometimes marketers are under such pressure to offer discounts they fail to realize the unsustainability of those promotional plays. Before you rush to the bottom, consider the following:
One :: Discounts Do Not Equal Value
In uncertain times, people are looking spend less, but that does not necessarily mean paying the absolute lowest price. The perception of “value” or “bang for your buck” becomes the paramount concern. If you are spending more wisely, why waste it on a poor quality product just because it’s “cheap”. Think of Target’s “Expect More, Pay Less” campaign. Simply-put, they increased the quality and selection of their products while keeping the price about the same.
Two :: Security is Important
While we’re talking about “value” and consumer perceptions, security and safety are also important components. Offering longer warranties, promoting the Brand as stable with a long life ahead of it will all help to build a level of comfort in a time when even the largest businesses seem venerable.
Three :: One Size Does Not Fit All
While consumer spending and confidence are down, businesses like to make rash decisions and treat all potential customers as “deal seekers.” Beware, a broad-stroked strategy like this is often a mistake. When times are lean, a deep understanding of the differences in your customer based will have a pronounced effect on your business performance.
Four :: Protect the Brand
If your brand is like Walmart, now is a great time to keep your brand promise. For everyone else who’s brand has rested in areas like innovation, services, selection, quality, etc., switching to a model based solely on discounts may make recovery impossible. Consider showcasing how your attention to innovation has paved the way for your relentless, consistent consumer value.
Don’t believe me? Keep a close eye on Neiman Marcus. They’re making deep discounts into a Brand that has stood for innovation, quality and stature for 100 years, now they’re looking like Macy’s. How could they ever recover in the long-term what they’ve given up to stay afloat in the short-term?
Five :: Find the Mid-Term Opportunity
Speaking of Neiman’s, there is no doubt consumer and business customers will be seeking value in response to the pain and uncertainty in the economy. However smart marketers with the resources and vision to consider alternative strategies in the mid-term are those that will come out on top.
As my dad used to tell me, "Don’t sell your car for gas money."
