Most of my career (30 out of 37 years) has been in outside packaging sales, and one thing I never engage in is "loss leader pricing" - quoting one or a handful of products at very low margins to get my foot in the customer's door, while quoting the remainder of their products at healthier margins. Because in due time, I'll just be selling them the loss leader products.
Which proves the maxim "Get business on price, lose business on price." Deep discounting at the retail level is the exact same thing.
I confess that I am one of those customers who always waits for a sale or a deep discount -- for things that are not immediate necessities. For those that are, such as groceries, I buy certain items only from the stores that have the best everyday prices for them. So cheese is always from Aldi. And when Aldi puts it on sale at an even lower price, I stock up a bit so that I won't have to buy more during the next week or two when prices are back to normal.
Yeah. I think stores and brands really ask for this behavior when they have recurring deep discounts. For instance, the dress shirts that I buy for work go on sale for about 50% off about four times a year. Knowing that they are at times discounted that deeply, I feel like I'm being cheated if I ever pay full price, so I always wait for a sale.
That's why companies need to be very careful before they set the expectation that there are ever deep discounts like that.
Our local grocery chain has salmon on sale every other week. I only buy it on sale, never full price. The same with frozen shrimp. I suspect the sale price is the “normal” price and she the price is higher they expect to have lower sales volume and/or diversion to other products. What do you think?
That's pretty common with some grocery stores and products.
Technically, there are legal limits on how much time a product can be listed as "on sale" before it is considered deceptive advertising. I believe that a product is supposed to be at the full price for at least half the time. But the enforcement is pretty lax, and some retailers seem to just go ahead and show products as on sale pretty much all the time. It's a way of trying to communicate that the product is valuable while at the same time offering a lower more affordable price.
I imagine one of the tough things there is that they started from such a high point. They were the ones who took the "what if we charged $4 for coffee instead of $1" model national and shifted the culture to where you even saw construction site guys with Starbucks cups.
But they've also built out so much that they're as common as McDonald's. It seems like that starts to set you up for certain contradictions.
Most of my career (30 out of 37 years) has been in outside packaging sales, and one thing I never engage in is "loss leader pricing" - quoting one or a handful of products at very low margins to get my foot in the customer's door, while quoting the remainder of their products at healthier margins. Because in due time, I'll just be selling them the loss leader products.
Which proves the maxim "Get business on price, lose business on price." Deep discounting at the retail level is the exact same thing.
I confess that I am one of those customers who always waits for a sale or a deep discount -- for things that are not immediate necessities. For those that are, such as groceries, I buy certain items only from the stores that have the best everyday prices for them. So cheese is always from Aldi. And when Aldi puts it on sale at an even lower price, I stock up a bit so that I won't have to buy more during the next week or two when prices are back to normal.
Yeah. I think stores and brands really ask for this behavior when they have recurring deep discounts. For instance, the dress shirts that I buy for work go on sale for about 50% off about four times a year. Knowing that they are at times discounted that deeply, I feel like I'm being cheated if I ever pay full price, so I always wait for a sale.
That's why companies need to be very careful before they set the expectation that there are ever deep discounts like that.
Our local grocery chain has salmon on sale every other week. I only buy it on sale, never full price. The same with frozen shrimp. I suspect the sale price is the “normal” price and she the price is higher they expect to have lower sales volume and/or diversion to other products. What do you think?
That's pretty common with some grocery stores and products.
Technically, there are legal limits on how much time a product can be listed as "on sale" before it is considered deceptive advertising. I believe that a product is supposed to be at the full price for at least half the time. But the enforcement is pretty lax, and some retailers seem to just go ahead and show products as on sale pretty much all the time. It's a way of trying to communicate that the product is valuable while at the same time offering a lower more affordable price.
I don’t know their current sales mix, but I can see it problematic if they’re starting to look like Dunkin. That can’t be the margin they want.
Yeah.
I imagine one of the tough things there is that they started from such a high point. They were the ones who took the "what if we charged $4 for coffee instead of $1" model national and shifted the culture to where you even saw construction site guys with Starbucks cups.
But they've also built out so much that they're as common as McDonald's. It seems like that starts to set you up for certain contradictions.