Simeon Siegel, CFA speaks to CNN discussing when promotions work, and when they do not, stressing his view that discounts do not drive demand for items that people already have, with no benefit of substitution. http://spr.ly/60409HJWq
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"If someone has a barbeque, they're not going to buy another simply because it's on sale. If someone doesn't need to buy a grill, there's only so many things companies can do to create demand." I spoke to CNN discussing when promotions work, and when they do not, stressing my team's view that discounts do not drive demand for items that people already have, with no benefit of substitution. Full piece here: http://spr.ly/60409HJWq #grills #bbq #july4 #independenceday #discounts #promotions #demand
Simeon Siegel, CFA speaks to CNN discussing when promotions work, and when they do not, stressing his view that discounts do not drive demand for items that people already have, with no benefit of substitution. http://spr.ly/60409HJWq
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"If someone has a tent/kayak/bike/rainshell...." Simeon Siegel, CFA, consistently produces remarkable analyses in retail. You should follow him. This particular post's point is very germane to the current outdoor gear environment. Brands that need to move big-ticket items generally only have one lever to pull—discounts. But at a certain point, when consumers have already purchased goods in those categories, those discounts are ineffective in moving products and destructive to brand equity. Crazily enough, it doesn't seem that all of the lessons of the last four years have completely sunk in for our industry yet. We can't get our supply right for demand. Once the merchandise is delivered, the challenge of finding a market for it becomes apparent. It's a case of 'the horse is out of the barn '. The only way to break this cycle is through improved planning that prevents excessive overstocks. The problem lies on the supply side, which currently does not align with the demand. It's evident that a significant number of decision-makers, particularly in public companies, are reluctant to reduce production. However, the current strategies are not sustainable. The relentless use of discounts is eroding brand value, diminishing the perceived worth of products, and ultimately, reducing demand. This could lead to some big companies losing their market entirely, forcing them out of business. Hmmm... Economics does have a solution for everything. It's too bad that this particular solution involves the loss of many jobs and small businesses.
Simeon Siegel, CFA speaks to CNN discussing when promotions work, and when they do not, stressing his view that discounts do not drive demand for items that people already have, with no benefit of substitution. http://spr.ly/60409HJWq
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Strategic global retail leader driving growth and innovation and transforming retail landscapes with visionary leadership and agile strategies. 30+ Years Clarks, Under Armour, New Balance, adidas
I've mentioned this many times before. If your not talking, features and benefits under the umbrella of a compelling unique story all there is left to talk about is discount. Discount and promotion are powerful tools but must be used with caution so as not to educate your consumer and send your business in to a downward spiral of lost margin and heading to become another statistic of a business that has gone under. 1. Discounting Will Devalue Your Brand When you consistently offer discounts on your products or services, customers will start to question their actual value. Over time perception will shift so that your regular prices are perceived as inflated or unfair. You will find yourself with a consumer base who only buy when a discount is available. This not only reduces your profit margins but also devalues your brand. 2. Dependence on Discount Destroys Customer Loyalty The frequent use of discount can create a culture of discount dependence. Customers will delay purchases until a discount is available, or they will vote with their feet and switch allegiance to competitors offering better deals. This undermines the concept of brand loyalty and makes customer retention more challenging. It’s important for businesses to cultivate a strong customer base that appreciates the brand for its quality and uniqueness, rather than simply its price. 3. Damage to Perceived Quality and Image Continuous discounting will harm your brand image. Some consumers equate low price with low quality, so a brand that is always on sale may seem less appealing to potential customers seeking quality. 4. Margin Erosion Offering steep discounts can drastically reduce profit margins and consumers will be less willing to purchase at full price, affecting your overall profitability. 5. What Brand Value Proposition? Customers will associate your brand only with discount rather than its unique selling proposition, quality, or excellent customer service. 6. Potential Impact on Long-term Business Relationships You will be viewed by wholesalers as bringing nothing other than a discount proposition rather than "Brand Heat" How many brands do you know that are always on sale? What impact does "always on sale" have on your perception of that brand? #discountdeath #racetothebottom
Simeon Siegel, CFA speaks to CNN discussing when promotions work, and when they do not, stressing his view that discounts do not drive demand for items that people already have, with no benefit of substitution. http://spr.ly/60409HJWq
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Consumers can’t help but take it personally when “flexible” prices seem unfair. https://lnkd.in/dnFwyXPK Marketing professor Laurence Ashworth, who has long studied consumers’ perceptions of fairness, says these feelings are often a side effect of dynamic or surge pricing. This revenue management strategy involves setting flexible prices based on current market conditions. In a recent study with Lindsay McShane of Carleton University and Peter Darke of York University, Professor Ashworth found that feelings of unfairness can get deeply personal for consumers. Read at Smith Business Insight. #SmithBusiness #SmithInsight #ConsumerPsychology #Pricing #Retailing
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Great segment featuring Christine Short on Fox Business Network's "Making Money" with the always entertaining Charles Payne this afternoon chatting about where retailers such as discount chain Five Below fit in this earnings season and US jobs data. View clip below. #earnings #investing #trading #stockmarket #retail
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Increasing Financial Literacy, Production & Profits through Tactical Expertise|Financial Coach & Mentor | Professional Trader | Marine Corps Veteran
Costco (COST) is scheduled to release earnings today after market close Equity Traders: -Look for short trades between $581.37-$612.71 -Look for long trades between $521.07-$501.27 Option traders: - Sell the 610/615 Vertical Call Spread Or - Sell the 500/495 Vertical Put Spread Investors wanting to own (COST) sell cash secured puts at 500 or below. Want to learn the strategies and techniques we use to identify potential opportunities go to www.spltradingllc.com The trading opportunities mentioned are informational and not intended as personal financial advice, conduct your own due diligence, all trades involve risk, there is no guarantee of ROI, a potential loss of capital exists with any trade. #optionstrading #tradingstrategies #earnings #wealthmanagement #wealthcreation #financialeducation #spltradingllc
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Costco (COST) is scheduled to release earnings today after market close Equity Traders: -Look for short trades between $581.37-$612.71 -Look for long trades between $521.07-$501.27 Option traders: - Sell the 610/615 Vertical Call Spread Or - Sell the 500/495 Vertical Put Spread Investors wanting to own (COST) sell cash secured puts at 500 or below. Want to learn the strategies and techniques we use to identify potential opportunities go to www.spltradingllc.com The trading opportunities mentioned are informational and not intended as personal financial advice, conduct your own due diligence, all trades involve risk, there is no guarantee of ROI, a potential loss of capital exists with any trade. #optionstrading #tradingstrategies #earnings #wealthmanagement #wealthcreation #financialeducation #spltradingllc
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Pricing heuristics (those cognitive shortcuts that help people make decisions about how to spend and what to buy) have never been so important. Thank you to WARC for inviting our CSO Christopher Tyas to explore why key pricing heuristics and related purchasing triggers are now dominant, and how brand owners need to adapt to protect brand value. Read more here - https://lnkd.in/dpaNK__J?
Modern pricing heuristics in a cost-of-living crisis | WARC
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Can you really win the pricing game? 🤔 Wendy's dynamic pricing debacle hints at a bigger issue.. Wendy's announcement of possible 'dynamic pricing' sparked backlash, with accusations of price gouging. This is not new. Airlines, Amazon, and others have been changing prices fluidly for years, often based on complex data. Somethings to note: 👉 Obfuscation is Key: Fees and complex pricing make comparing costs difficult for consumers. 👉 Discrimination is Rising: Data lets companies personalize prices, potentially disadvantaging some buyers. 👉 Economists vs. the Public: Economists see efficiency, consumers see unfairness. This is an ongoing battle. This isn't just about burgers. As companies track our every move, maximizing profit can feel predatory. Being aware of pricing tactics is one way to fight back, but it shouldn't fall solely on consumers. Have you noticed personalized pricing? Do you think it's fair, or a sign we need more regulation? Let's discuss! Source: Christopher Beam, The Atlantic #pricing #consumerbehavior #economics #bigdata #personalization
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CEO | Consumer Products | Retail | Financial Services | Harvard Business School | Board Member | Expert Witness (Inventory Valuation) | +Follow Me for i.T.R.E.A.T.S. | RETHINK Retail #TopRetailExpert.
iTREATS - another DYK / WIM / WTD 👇 Did you know (“DYK”) .. that mature retail businesses are primarily evaluated on the basis of their same store sales or "comps"? Why it matters (“WIM”) … This means that retailers, investors, and analysts focus on whether the business has grown its sales by comparing comparable periods. But is this the best metric for a mature business? NO! Because a retailer can "buy" sales by discounting and running promotions, which can increase sales at the expense of business health and profitability. What to do (“WTD”) … So, what should leaders, analysts, and investors focus on instead? Gross profit/gross margin dollars. Why? Because every additional dollar of gross profit/gross margin drops to the bottom line, assuming G&A costs stay flat. On the other hand, every additional dollar of sales doesn't - even if G&A costs stay flat, as sales are reduced by COGS. Moreover, if the additional dollar of sales is the result of a promotion, the negative financial result compounds. The key is to focus on reducing COGS and increasing prices instead of sales. While it may require more work and take more time, truly finding cost savings in COGS and G&A makes for a better business. And while raising prices is always a challenge, starting small means that the vast majority of customers won't notice. For those who do, the price increase should be small enough to swallow. #retail #businessstrategy #financials #profitability
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