Walk into a Rolex boutique, ask to see the discounted products and you’ll be laughed at. Head over to JB Hi-Fi and you won’t be able to find something at full price.
Different approaches, both highly successful operations.
Price is not just the amount your customer pays in exchange for a good or service, it’s an integral part of your brand and overarching marketing strategy. Price is a robust tool for communication and can completely alter the perception of your offering.
It's interesting to look at contrasting pricing strategies: while a luxury brand like Rolex builds their aura of scarcity, exclusivity and craftsmanship by never discounting their products, retailers like JB Hi-Fi capitalise on seemingly perpetual sales to drive customer traffic and boost sales volumes.
Offering discounts, when done right, can undeniably spike sales and entice new customers to try your product or service. This is especially useful during seasonal periods, where consumers are actively seeking out promotions and deals. However, perpetually discounted prices can inadvertently signal a lack of confidence in the product, create a “bargain brand” image or fatigue your consumers altogether leaving you with a large dip in sales the following month.
If you want to add value without reducing price you need a deeper understanding of what your target audience perceives as 'valuable'. It may mean bundling products, offering exclusive content, or providing exceptional customer support that rises above your competition.
Brands often weave in additional services, like free shipping, extended warranties, or loyalty programs, effectively heightening their perceived value without reducing their price point. This is common for mobile carriers at the moment with bluetooth earphones, smartwatches and other accessories often being thrown in to sweeten the deal for consumers.
It’s crucial to take time to consider your pricing strategy and be mindful of the message it sends to consumers. Price shouldn’t always be calculated off a simple formula based on the cost of materials and labour. You need to consider demand, competition and your overall marketing strategy to develop price points that resonate with your target audience.
Discounts can be a compelling short-term strategy, but one needs to tread carefully to ensure that they do not erode the perceived value of the brand. Meanwhile, utilising non-price value enhancements and understanding the psychological principles that drive purchasing decisions can sculpt a pricing path that is both profitable and brand-enhancing.
Whether you align more with Rolex’s staunch stance against discounts, or JB Hi Fi’s relentless discount-driven strategy, being consistent is key. The critical takeaway here is that pricing strategies should not be a one-size-fits-all approach but rather be intricately woven into your brand's narrative, considering not only the immediate financial impact but also the long-term strategy and positioning of your brand.
Let us do the thinking for you.