It’s one of the many wonderful times of year again, when living in a multi-cultural society like Malaysia really pays off, and people of all creeds, colours and religions share in each other’s celebrations. These times are also key trading periods for suppliers and retailers alike. So why, oh why, do we, as an industry, insist on destroying much of the value and potential margin through an obsessive focus on price?
This Chinese New Year, with the exception of the upmarket retailers, who use a novel range, most of the stores will, as usual, be flagging price as their core shopper incentive. I struggle to understand why you would slash the price of beer and mandarin oranges, at the one time everyone will buy them anyway?
An interesting debate is do we drive consumption, or are we really driving pantry stocking? I suspect more of the latter in most cases!
OK, I understand the competitive pressures, and the battle for shares, but seriously, the price issue usually ends up as a chest beating exercise of who can lose the most! Personally I have a problem with this for two reasons;
- As Shopper Marketers, we should all be very aware price is only one way to change Shopper behaviour.
- If we, as an industry, continue to “train” shoppers that prices will drop at certain times, why would they ever expect to pay full price? Most shoppers now have not only become conditioned as to when the promotions come, but also know that at key festive times, the price will keep on dropping until the very end.
I was talking to a sales manager for a well-known beer company, and when discussing his sales volumes over the CNY period, he commented “Shoppers will wait for RM88 a case, then the stock will fly”. Was this a planned strategy? Oh no, “it happens every year”. Small wonder few people are buying at full price!
So what do we do about it?
A big challenge, and one that takes a big heart to tackle. My proposal would be we start looking at how to add value, rather than destroying it.
Here are some thoughts to start the ball rolling;-
- Understand Current Shopper Behaviour – In order to change Shopper Behaviour, you first must understand it. There is a mountain of data available, the challenge is developing really solid insights into the drivers of purchase, and even more importantly, the barriers. You have to know why people are not buying as much as why they buy, before you can do something about it.
- It’s an Occasion!! – With a few minor exceptions, most Festive displays are built up by category, so all confectionary together, all beer together, etc. Wouldn’t it be more appropriate to put the occasion together? So beer+steaks+sauce+barbecue sets+glasses+outdoor lighting? This sort of approach could allow some really creative executions.
- Price will not go away. – Price as a key selling tool is now so ingrained into both retailer and Shopper, it is hard to imagine a world where it is not a focus. I guess this should not be a surprise, it is actually the easiest thing for a retailer to do. As Shopper Marketers, we need to continuously promote other ways to change behaviour, that don’t actually destroy value! At engage we believe the activities taken instore can be grouped as Communication, Offer and Availability. As Price is only a small part of Offer, and probably the most expensive, there are lots of other opportunities to change Shopper Behaviour. Bear in mind, for this to work, we always need to show the financial benefits of a proposal, what does it do for the retailer?
The really interesting part would be the love a retailer would show to any Shopper Marketer who drives value, without losing share!!