Value-adds beats 'price discounting' hands down!
Business owners will often hear me preaching about the dangers of continually “price discounting.” The reason that price discounting is not a smart marketing move for most of us it’s because it’s simply not sustainable.
Here in Australia, even David Jones and Myer have recognised the danger of having too many “SALES” – hence the reason that these two departments store chains primarily have a mid-year sale and a Boxing Day sale. They realise that aside from price discounting being unsustainable in a regular business model, it also would severely tarnish their up-market brand.
So, whilst it’s very tempting for you to quickly thrust a crazy discount upon your target audience in order to quickly move stock or your services, be aware of the dangers of doing this!
- You can’t do it continually, because your business model most likely cannot sustain 20%, 30% or 50% off all the time.
- It tarnishes your brand.
My footy card days proved that “value-adds” beats “price marketing.”
When I had the license to produce the NRL rugby league football cards back in the 90’s, I followed a bubble gum confectionary company called Scanlon’s (who previously had the Rugby League bubble gum card license for many years).
The football ball cards where previously sold for 50 cents per pack and inside each pocket were 6 collectable cardboard cards, each featuring a footy star.
When I took over the license in the mid 90’s, I decided to mirror the US basketball swap cards and took the quality of the card board up considerably (to a much thicker grade and better quality), improved the photography, added “wizardry” with added special effects and added chase cards to stimulate repetitive sales.
These “chase cards” were metallic gold edged or psychedelic and were placed randomly in every thirtieth pack, hence the word “chase cards” because the kids were chasing them!
When it comes to basketball or footy cards, the target audience were predominantly boys aged 5 to 17 years and the “stock exchange” is the school playground.
Any male reading this article would be very familiar with swapping their footy cards or basketball trading cards – before, during and after school!
I also introduced a very prestigious Mal Meninga (a huge footy superstar at the time) Megamotion Card, specially made by Kodak in the US for me. This card was the trading card of all trading cards, if you were lucky enough to score one of these, randomly inserted in every hundredth pack, you have hit the jackpot.
This card contains a 7 seconds footage of Mal Meninga scoring a try and believe me in the mid-90s this technology was out of this world, every collector was buying more packets, trying to score this elusive chase card.
My footy trading cards sold for $2 a pack.
Let me point this out to you.
The year before I took over the NRL trading card license, packs of cards were selling for 50 cents. Yet when I launched my trading cards, we sold each pack for $2, and everyone – including the NRL Rugby League head office thought I was raving mad.
However, I was adding “significant value” to the product, increasing not only the cardboard stock, but also the photography, artwork, packaging design and marketing. I had News Limited Sunday Newspapers promoting the cards as free giveaways, and on each occasion the publication supported the giveaways with $300,000 worth of TV advertising.
And of course I have the elusive “chase cards” as part of the collection, meaning that children were going nuts buying more packs at the local news agents in order to increase the chance of finding one or more of these chase cards.
And the result?
My cards were sold-out in a couple of weeks and therefore I introduced further “series.”
The sales for the trading card product the year before I took over the license were $2 Million.
During the first year that I had the license, retail sales skyrocketed to $12 Million, 6 times the previous year’s sales.
So don’t let anyone tell you that “Price Discounting beats Value-Add.”, as I can tell you not only from my personal product experience, but hundreds of businesses I have consulted to since, that value-adding is the much better option.
Now is the time to think about how this relates to your products or services and start value-adding!
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