The Price is Right or Is It?
With easy access to comparable prices frequently in one’s pocket, the sport of paying as little as possible for products has become all consuming. Add to that the constant inundation of email with coupon discounts, direct mail with coupon discounts, sites dedicated to accumulating discount coupons (and tracking behavior) and there is a free for all on the selling floor, a real FOMO on the rock bottom price. The marketing tool box is centered around wrenching prices vs. building and reinforcing a brand.
While this was in full swing during the holiday season, retail businesses were reaching the finish line in that race to the bottom. Stores simply packed up and disappeared between Christmas and New Years leaving gaping holes in malls throughout the US. The disappearing continues.
You get what you pay for. And you pay for what you value. If your customer doesn’t want to pay enough for a product to keep a business viable, natural selection goes to work and the business is “Darwined” out of existence. Produce something unique. Tell a compelling story. Do your homework and find your audience. And make sure the price is right to produce a sustainable profit or don’t get into business.
Underwater Stick Waving
Lake Winnipesaukee cloaked in her early morning mists in Meredith, NH.
Who knows what is going on beneath the surface of a murky body of water? If we can’t see it, is it really happening? With so many moving parts in the business of retail’s multiple selling and marketing channels, how does one get the customer’s confidence? More is not more. It’s simply overwhelming. Multiple daily emails with different deals in different channels and mixed messages in social media can be mind numbing. Yes, we need to be available to the customer wherever the customer wants to be reached, but we need to do it with consistency, offering non conflicting deals and stories in all channels at the same time. Otherwise, that effort is frustrating or invisible to the customer and might as well be underwater stick waving.
Marketing or merchandising? Who gets to choose the focus? This tension has existed for as long as I can remember. Marketers are the story tellers, determining and inspiring the targeted audience to make the purchase. Merchants comb the market place on a constant quest for the “right stuff” and always take into account the why and the who behind the choices. If you don’t know why you’re offering a product, you should not be acquiring it. Sometimes that stuff is exclusively developed with product managers and/or manufacturers to drive demand. In others, the merchandise is inspired by instinct based on glimpses of trends from all types of media. Or simply part of someone’s product line. (My kids thought people read magazines by ripping the pages after experiencing my habits.) Product assortments are based on logic and magic…interpretations of what is on the horizon, has been successful in other forms, or is total shot in the dark based on gut and analysis.
If merchants don’t know why they are purchasing/developing product, don’t have a clear vision of the price and profit guidelines and have no vision of product positioning, they aren’t doing their job. Same goes with marketers. If they aren’t asking the why behind the what in order to tell their story, they are not contributing to business growth in a collaborative partnership. It’s a team effort. Both talents are necessary to grow a profitable customer base. Embrace the blurring and create something great!
Now that you have an earworm, here’s some relief: http://bit.ly/2oQpiDO
As an economics major, the very first lessons involve supply and demand. When demand increases, supply should rise to meet the demand without flooding the market with excess. If that happens, the product becomes ordinary and the price lever is utilized in an effort to reduce the supply before demand evaporates altogether.
Designers begin demand creation by developing inspiring products, often working with merchandising and marketing teams for input. Flattering silhouettes. Appealing colors. Uniquely useful items. Faster, smarter, better. Items that make a statement about the person consuming them. Without exposing those things to an audience, the creation has no purpose. Merchants are constantly searching for the fresh, new “stuff” with a target audience, price tolerance, profit margin and end use in mind, often guided by details in financial plans and working with merchandise planning teams. Marketers are critical in getting the story of those products in front of the key audiences using both visual and analytical components for the best ROI. All together, they create demand while walking the razor’s edge of the right amount of supply as well as product expansion opportunities. When the demand for the supply has begun to downtrend, price reduction can be used responsibly to liquidate the excess quantities.
This all leads to the right product, at the right price, in the right quantities at the right time. The ultimate endgame for creating demand and maximizing profit. Otherwise, why bother. Driving demand with the hi/lo pricing game may drive short term results, but will ultimately reduce profitability and shorten the life of a product prematurely.