Are Discounts Hurting Your Business’s Profitability?

Are Discounts Hurting Your Business’s Profitability?

Last Updated: Jan 22, 2014
Running a sale to attract customers is a time-honored marketing strategy, but is it one you should be using in your business? Learn why discounting can erode your profits even as it stimulates sales and find out what you can do to avoid having to discount prices to compete.

big discountsPrice tag markdowns, sales promotion, and vouchers perform an important part in most retail firms, in spite of size. They stimulate curiosity and product sales, which in turn generates a noticeable lift in revenue.

Furthermore, cost reductions reach customers who may in any other case choose not to buy certain items. The trouble is, little retailers who rely heavily on customer and brand loyalty may be tempted to reduce costs whenever they are overstocked, or sales are unexpectedly sluggish. The instant increase in product sales conceals a number of drawbacks.

Below, we are going to clarify the reasons a business model developed on continual price markdowns is fraught with limitations. We’ll also explain why discounting may still make good sense for your retail shop in particular circumstances.

Understanding The Limitations Of Discounts

Discounting has always been an effective strategy to lift sales. Retail stores in every area of interest have decreased costs to create more business. Over the past number of years, however, continuing price discounts have become a veritable business plan with many merchants rarely selling merchandise at ‘typical’ prices. For instance, coupon engagement rates are at their highest levels. In addition, discount campaigns, once offered on an occasional cycle, have become perpetual for many merchants. As earlier noted, this strategy genuinely does promote sales. However it is important to be aware of its disadvantages.

First, clients who purchase items when prices are decreased provide no comprehension of their future purchasing behavior. For example, a half-gallon of frozen treats usually marked at $5, but discounted to $2.50 for a promotion, may produce product sales; but the store is going to get no insight into its buyers’ long term buying decisions.

Second, unless of course discounting has been included in a retailer’s long-term pricing plan, it demonstrates an erosion in margins. The retail store owner will endure a decrease in earnings together with the drop in costs.

Continual Price Deductions and the Lessening of Customer Devotion

In addition to eroding margins and a lack of insight relating to future customer tendencies, regular reductions may well also cause your buyers’ devotion to diminishIn the same way your customers are faithful to particular brand names, so too are they devoted to your shop; but if you aren’t the low-cost leader in your specific niche market, your pricing strategy is unlikely to be the origin of their devotion. They stop by for some other good reasons, such as the level of support they get, or the breadth of assortments your store provides in certain product categories. If you reduce your prices often, you might begin to attract low-cost buyers. This could be positive if your retail model is based on selling goods in high volume. If this isn’t the condition, you may tarnish your shop’s “brand,” and thereby lose your existing clients’ devotion.

Does Discounting Still Make Sense For Your Store?

Despite the troubles imposed by on-going price cutbacks, they may from time to time be useful for modest retailers; as mentioned, marking down items may stimulate sales, hence getting rid of slow-moving products.The big-box merchants can steer clear of being trapped with stagnant stock. Most of them keep contracts with their vendors that allow them to give back products that don’t sell. Small merchants don’t have this protection on the majority of their stock; merchandise that continues to be on their floors and shelves cannot be returned. Markdowns become essential in order to move the goods.

How to Avoid Discounting Your Store’s Merchandise

Self-sufficient retailers who end up consistently discounting their stock may prevent these kinds of situations with a little upfront planning.

First, they have to create a reasonable sales strategy for each season (or quarter). The strategy ought to be based on sales statistics generated during previous years. It ought to steer clear of overoptimism with regards to sales growth throughout the upcoming period.

Modest retailers should additionally keep slim stocks, even if their suppliers offer attractive prices for bulk orders. Large stocks frequently grow to be flat, leaving the vendor with merchandise she is not able to sell without applying extreme markdowns. Keeping stocks small gives self-sufficient store owners much more flexibility with regard to their cash flow. This permits them to leverage new possibilities when they arise.

To summarize, discounts represent a beneficial retailing technique; they bring customers to your store; they encourage them to make purchases; and they help to sell through goods that fail to sell at their normal prices.

But be skeptical of using discounting as a crutch for short-term profitability.

Get more information about running store promotional sales at your location. Find more at


10 Ways to Use Periscope for Your Business

10 Ways to Use Periscope for Your Business

Last Updated: Oct 13, 2015
Periscope is the newest social media platform to become popular. What is it and what good is it to your business? Find out here.

Periscope live streamingIt’s the new social media network that’s gaining traction and you need to know how to use it. Periscope is a platform owned by Twitter. According to Twitter the platform now has about 10 million users and nearly 2 million people use the app daily. That’s pretty small when compared to the larger social networks but Periscope represents something more that you should understand for your business. 
Times Are Changing 
Did you know that standardized test scores now show that peoples’ ability to read and comprehend are at their lowest ever? People are no longer reading as much as they were causing their ability to consume content through text to diminish. In fact, experts predict that within just a few years the Internet will deliver content mostly through media—pictures and video.

What does that mean for you? It means that putting together print advertisements and blog articles will be far less important than your ability to produce engaging imagery—still and video.

RELATED: Take Your Pinterest Strategy to the Next Level

What is Periscope?

Periscope allows you to create live broadcasts of anything. Unlike traditional video that you record and share, Periscope videos broadcast to your followers as it happens. Simply hit the broadcast button and you’re streaming live to people’s mobile devices. On one hand that may seem a bit intimidating but there are plenty of ways to use it for your business.

1. Humanize Yourself

Millennials grew up with social media. They don’t put up with stuffy brands that try to look polished and perfect all of the time. They want to know the real people behind the businesses that get their money even if the real person isn’t as “put together” as some would like.

Use Periscope to show the person you are. If you’re a restaurant, show people the kitchen, for example.

2. Product Demos

If you’re in a retail-oriented business, show off the newest gadget. Every business has people who love to dream about having the best new products but may or may not have the money to do it. They want to know what’s new.

3. How-To Clinics

What’s easy for you is exceedingly difficult for your customers. Unclogging a toilet is easy for a plumber but not for somebody far removed from the plumbing business. What could you show your customers through a live video? People love to do business with people that freely give of their knowledge. 

4. On Location

Think about Periscope’s application for Realtors, for example. Weekends are full of open houses but potential buyers can’t get to all of them. What if your company did Periscope walk-throughs of homes over the weekend or any new homes that come to market? Not a Realtor? Think of a similar application for your company.

5. Let People Virtually Attend Your Event

Hosting an industry event? Or speaking at it? Let your colleagues or customers attend with you through Periscope. Of course, you should get the event organizer’s permission first but bringing more exposure to their event is probably worth it to them.

6. Company Meetings

Maybe you have employees or contractors over a large geographical area. Periscope is the perfect way to hold a company meeting that doesn’t involve a lot of two-way communication. Periscope allows people watching to leave comments so you would need somebody helping you but Periscope is free. Those video conferencing platforms can get expensive.

RELATED: How to Market Your Business Effectively on Twitter

7. Exclusive Offers

Especially since Periscope is relatively new, it’s a great way to set up an exclusive-feeling environment where you can offer discounts and coupons to people who connect with your broadcasts.

8. Customer Service

What if you set up a Periscope broadcast daily or weekly where customers could watch as you answer customer questions about your products or service. Kind of like a video support forum. What an awesome way to educate while being immediately responsive to your customers.

9. Collect Leads

There’s no reason you can’t have a call to action. Have your viewers leave their e-mail address in the comments section for more valuable information.

10. Share It

You have 24 hours to get your live broadcast out to others via social sharing. Push it out to your social media networks and e-mail list so people can see the valuable content you created.

Final Thoughts

Don’t worry about making your content look beautifully produced. Periscope users understand that videos are raw and real. That’s part of the appeal. However, use some basic video rules like good lighting, a steady camera (get a tripod for your phone or tablet) and possibly use headphones with a mic for the best audio quality.

Finally, remember that above all else, quality content is key. If you’re going to ask for your viewers’ time, make it engaging, entertaining, and energetic. Don’t talk about yourself. Use the platform to help them in some way. If you do that, they’ll come back.

Who knows if Periscope will be the next Instagram but for now, it’s growing and it’s early enough that you can find an audience quickly. Give it a try.

© 2015 Attard Communications, Inc. All Rights Reserved. May not be reproduced, reprinted or redistributed without written permission from Attard Communications, Inc.