Are price promotions key to the success of your eCommerce business?

03/06/2020

Angela de la Vieja

Price promotions, also known as promotional pricing, are strategies that have been used in marketing campaigns for as long as businesses have been selling goods and services. They’re obviously a popular method of increasing sales and attracting customers, but, despite their popularity, they often sacrifice profits by lowering your sales revenue.

In the past, when there was less competition in the market, price promotions were sporadically used by retailers to offload accumulated stock, for example. The current reality is different. With the number of competitors in the market and the existence of increasingly demanding consumers, it makes sense for many businesses to use large promotional discounts to stand out from the crowd. But is this constant barrage of sales necessary?

Here we’re going to lay out some of the reasons why promotional pricing often may not be as successful as retailers expect it to be or may even negatively affect your company’s image.

Increased price sensitivity

Consumers are increasingly astute and understand the marketing techniques that companies like to use. The bombardment of promotions that we mentioned earlier has left users more and more accustomed to waiting for deals. Because of this, unlike in the past, consumers no longer wait for the sales periods in July and January as if they were a godsend since they know that there will be another deal sooner or later. Beyond this, the majority of consumers don’t want to pay full price for an item unless it’s absolutely necessary because they know that a discount is waiting just around the corner. As a consequence, in addition to constant price wars, this also affects consumer price sensitivity.

Your reputation could be called into question

A retailer who often uses price promotions can be damaging their own image in the process. If a pair of shoes is sold at $30 with constant promotions, those shoes have a value of $30 in the eyes of the consumers. This means that when you want to return to the normal price, “X”, the consumer will resist. Even worse, they might think that the new price isn’t real, that it’s an inflated price that simply allows you to offer the “promotional price”. In short, this damages your reputation.

A weak foundation for long-term success

Price promotions generate short-term income but don’t provide a foundation for long-term success. When your products are constantly priced at promotional rates, the customers that you attract will be those that are always looking for cheap products or services, who will also abandon you for a better price. This is a race to the bottom where some businesses may be willing to do absolutely anything to generate some income.

Price promotions can be effective when used in moderation as a tool to sell off inventory or to introduce your products to consumers.

The truth is that opting for a pricing strategy involving constant low prices isn’t always a smart tactic. More and more retailers are opting to use price optimization software to help them increase their sales without sacrificing profits.

11/11/2022

Consumer behavior: How can behavior tracking be effective for setting the right pricing strategies?

Behavior tracking is becoming massively popular today. As a result, pricing strategies born from studying consumer behavior are a merchant's dream come true. If done right, it can conquer every market for the business quickly. With abundant data available, the strategic makeover of the pricing models is becoming easy for companies.

What is behavioral tracking, and how is the data beneficial in pricing?

For a quick understanding, behavioral tracking refers to gaining in-depth knowledge and insights into consumers through their web data. Their browsing habits, spontaneous decisions, shopping interests, and preferences come under behavioral tracking.

How can enterprises use customer behavior data?

Companies can use customer behavior data as a tool to strengthen their hold on the market. A customer’s preferences, values, and tendencies allow businesses to work in sync with them through the collected data. Apart from this, customer behavior can also aid in:

Tailoring customer needs for customer retention

Personalization is becoming the heart of a company’s growth. No matter in which area an enterprise is functioning, tailoring the services, products, and solutions is becoming increasingly crucial. Uniqueness and personalization attract the crowd like no other.

Increasing the overall value

One of the best ways customer behavior data affects a business is by upgrading the value of customers for the business. The customer’s characteristics allow the company to target the people that match the business prospects well.

Optimizing every type of content

Everything that is up for digital display requires content. You must have seen companies unveiling their products or services through advertisements and making the initial public appearance. Two essential sales strategies – upselling and cross-selling comes through content optimization.

Pricing Strategy

Last but certainly not least is the influence of customer behavior data on the pricing strategy. The pricing strategy essentially constitutes content derived from data analysis. Companies need to have a dynamic approach to the pricing system to attract the right customers.

17/02/2015

Saint Valentine’s Day, always a good opportunity

V-Day is looming, a long-awaited date for all and also a good occasion for the eCommerce. According the study conducted by Prosper Insights and Analytics, it is forecasted the average consumer expense that day will be the highest in last years. Furthermore, 25% of them will buy online, which means an increase of 4% regarding 2014 (The US department of Commerce). This is, therefore, a key date where market competitiveness increase and which could be assumed as a big opportunity for our business or, a big fail if we do not adopt the correct strategies.

How to turn this event into an opportunity? To achieve this goal, we need to adapt our prices to this hostile environment, i.e. we need to develop an appropriate Dynamic Pricing strategy that allows us to adapt our prices to the variations produced in supply and demand and to position us ahead of our competitors. In V-Day, the frequency in changes will be higher, carrying it out each hour or even each minute. It is estimated that 65% of leader retailers have the ability to respond quickly at these variations, such Amazon. For this reason, it acquires great importance the correct use of a software specialised in price motorisation of competitors. Do not miss the time and adapt your business to new adversities.

28/12/2022

Which are the best footwear marketplaces to sell on?

Footwear marketplaces are booming. The last decade has seen the launch of new specialized marketplaces with millions of different users. Among them are Spartoo, Sarenza and Farfetch, portals with international reach. Their main value is that they unite hundreds of footwear brands, as well as offering clothes and accessories. Although each has its own characteristics, they are all vertical marketplaces, i.e., they focus on a specific area, and their sales categories are interrelated. For sellers, these portals provide an opportunity to expand sales channels and drive the globalization of their e-commerce business. We explain how to sell on these footwear marketplaces so that you can assess whether they align with your plans for the future and then start defining a possible pricing strategy.