There is an old adage that says that in the end everyone buys on price.
And indeed if you sell a widget, and the world wants widgets, and all widgets are the same, and loads of other firms sell that widget, then undoubtedly a price war will break out simply because none of the widget sellers have anything else to say or anything else to sell.
But the winner of that price war won’t necessarily be the person selling at the lowest price. At least not unless they have lots of other products selling at much higher prices, and an advertising campaign which very cleverly encourages people who buy the standard widget at the lowest price also to buy other products at higher prices.
For the fact is that discounting is not quite all that it seems. So let me explain what is going on.
It was noticeable that in the various special discounted days before last Christmas on Black Friday (an ironic name if ever there was one – it is actually “celebrated” on the fourth THURSDAY in November) only one in 20 offers were genuine discounts.
An article in the Guardian confirmed this, and it undoubtedly happened because the retailers had long since realised that giving discounts was the quickest way to bring one’s business to an end. (If you want to know why, see my little mathematical explanation at the foot of this email.*)
So what’s the alternative?
One way is to make your advertisements informative – which is what we try to do with schools.co.uk. I don’t mean that every advert we send out about our services is totally information based – obviously we need to sell our services too. But we do try.
If you’d like to see how we do advertising, without endlessly discounting (and just as important without trying to kid people by having Black Friday offers which are not discounts at all), do take a look at this website where lots of our ideas about how to sell into schools are stored.
I’m not trying to suggest that these articles are not adverts for our services – of course they are. But I am saying that these adverts are presented within the context of information.
If you’d like to discuss how you can change your style of advertising to a more information based approach please do give us a call on 01604 880 927 or alternatively send in one of your recent advertisements, and in total confidence we’ll give you our thoughts on how it might be changed to offer an alternative approach.
*Imagine a product that costs you £15 to make or buy in, and which you sell for £30. You discount the product by 30% bringing the price down to £21, reducing your profit from £15 to £6. To make £100 profit you previously had to sell seven items. Now you have to sell 17 items. But obviously if you sell 17 items you have more work to do, and more items might be returned by anyone who is not happy. So probably you have to sell 20 items instead of seven just to stand still. To make a real increase in profit you actually have to sell 28 items. That is four times as many! Which tells us why discounting usually doesn’t work.