Retail pricing strategies
This company’s history of discounting led to a reliance on promotions to drive sales, as well an overemphasis on discounts that put brand image at risk. The client wanted to improve gross profit on spot purchases.
Market research and consumption analysis showed that customers were not reacting to pre-discount prices as they had become accustomed to regular and significant discounts. Customers would avoid certain price points they considered to be “too cheap” to guarantee good product quality. We reviewed the existing discount price structure model and subsequently made recommendations for changes to discounting timing, scope, messaging and price points.
Our recommendations allowed the client to optimise its pricing and discount structure and achieve its conflicting twin objectives of maximising its profitability while maintaining the quality of its product.