If promotions are killing the (consumption) experience, why are they so omni-present?

Pricing & promotion

Posted by Bart Muskala

With the mild winter and fears as a result of the terrorist attacks, the current sales-season is critical for the retail industry. To shoppers, promotions translate into savings, guide buying decisions, encourage trial and make shoppers feel good. To retailers, promotions drive demand and encourage brand switching. However, recent research of the effects of the promotion strategies shows negative effects on both the buying and the consumption experience. Time for a change?

The insights that push towards change

Price promotions can be a double-edged sword. While it is enjoyable to consume a discounted product right after payment, the same discount may reduce the good feelings if the product is used after a few days.

Selling 75% discounted mittens might feel a bargain, but because we can’t use them with this mild weather, we tend to be dissatisfied with the product and - even stronger - the brand that sold us the mittens. Consumers have a greater motivation to psychologically recover the cost of buying the product when it was bought at full price (and thus enjoy it more).

The efforts to ignite change

The research provides insights into the mixed effects of promotions on sales and loyalty - price discounts may induce purchase and consumption in the short run, but can have negative long-term effects on customer satisfaction and brand loyalty.

As a result, brands should focus on focused and real-time promotions. While it makes sense to boost mitten sales as we speak, the opposite is true. Brands should focus their promotions on a select and varying number of categories. The recommendation to put the same mittens at sale once the winter hits us, feels counter-intuitive but its effect is less devastating on both loyalty and the consumption experience as there are no longer negative effects that may reduce repeat purchase or impact brand loyalty negatively in the long run.

The key takeaways from this story

A thought-through pricing strategy is an essential element of success in retail, but we must be aware that it affects the experience and appreciation of the products sold and our overall brand appreciation. With an ongoing quest for a “good deal”, smart pricing strategies can make or break the experience and in the long term, your customer’s loyalty.

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Why we selected this article? Brands are being challenged; promotions are synonym to retail, but its impact is not always beneficial. Our Belgian fashion research delivers insights on the impact of your brand’s pricing strategy on all other aspects.

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