Throughout our time in the marketing industry, whether on the professional side, or the academic side, the concept of sales has been routinely brought up as a contentious point.
It is true that when consumers are shopping, they love ‘finding’ the deals. They want to feel like they are ‘winning’ the against businesses and getting the services and goods that they want at a lower price. That is one of the major reasons why Cyber Monday (now, Cyber Week, it seems), Black Friday and so on are so big. Consumers are sitting on their cash waiting for brands to slash prices.
Why should marketers be content that people refuse to buy their products at full price? There’s something more going on there.
During a CNBC interview, a former CEO of JC Penny said that “sales have become a cancer” for department stores. Stores, instead of focusing on the right product and the right target market, are relying on sales to move products and drum up business.
Rather than spend time to truly figure out what consumers want, brands are too worried about bringing in cash. So brands cheapen the value of their products in the eyes of the consumers, and issue sales.
In theory, sales and discounts should be offered on few occasions:
1) Provide an incentive for immediately responding and buying
2) Clear outdated inventory and provide space for new and seasonal product
3) Get rid of otherwise defective products
4) Provide a reason to come in and see other products not for sale that the audience may be interested in
As in most cases, the reality of the situation is different than the theory.
It is not being said that sales are bad. Sales and discounts can be used very effectively. But sales and discounts are used best when used sparingly. Marketing is supposed to provide reasons why our goods and services make the lives of our target audience better. Slashing prices at will for the sake of getting people in all the time, takes away from the message.
There is a rising population trekking to this school of thought.
For example, fashion retailer Kenneth Cole announced earlier in November that it is planning to close all of its outlet stores, and focus on its full-priced boutiques and online presence. It should be noted that the brand is still doing sales online, but Kenneth Cole is also promoting its latest fashion line. So it fits the traditional sales process, while maintaining the integrity of the brand.
On the flip side, you have those brands that paraded the “everyday low prices”, like K-Mart, Sports Authority and others, closing their doors or filing bankruptcy, because competing solely on sales and prices is a very hard thing to do (unless you create economies-of-scale like Wal-Mart, but that’s a different story).
As more consumers become digitally savvy, stores will have to continue reinventing the in-store experience. Online, brands have to find ways to accurately showcase the value of their offerings, so consumers spend regularly, without the need for a sale.
Our marketing community needs to get louder and refuse offering sales and discounts for sales’ sake. We need to do better at protecting the value of the brand.