A pricing "Strategy" that will never win
It still amazes me that retailers (some even good retailers like Lowes) abuse their customers with these kinds of pricing "strategies". I purchased two pack of batteries at Lowes and was surprised by a rebate receipt from the cashier (Mistake #1 - no signage offering a deal so a straight give away), so, I went home and entered the 45 digit URL - not kidding 45 digits - on the receipt (Mistake #2 - no-go on the URL), so, I googled Lowes rebait and connected to their rebait center, entered my receipt details, address, email etc. Checked my email and received "confirmation" that the rebait request had been received and a little notice that it would take 6-8 weeks to receive my rebait (Mistake #3 - 6-8 weeks for ma digital rebait?).?
Why does Lowes choose to price and promote this way? The math is very clear, in my experience most people, like 90% or more, will not bother to do the work to get a $5 rebait. So, the retailer gets the benefit of the customer seeing a "price" without the cost of the markdowns. Manufacturers love these programs as well as they result in better placement in stores and the get their products on Lowe's promotional calendar.
The downside is obvious; a frustrated customer that knows they are being taken advantage of and resulting negative brand impact. That's why I eliminated rebates when I was with Best Buy many years ago. We had the power to tell vendors to be fair to consumers and pass along great prices without abusing the customer. In the years since I left Best Buy, I have seen rebates creep back into the "marketing strategy" of the company which is a shame because they have given up a little bit of their competitive advantage for little or no gain.
Marketing and product managers need to be smarter than this.??The use of blunt force tools like rebaits that abuse customer trust show a lack of creativity and I would even say laziness that should alarm brand managers and CEOs alike.??
Be well,
Ron
Partner, Valize
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For more resources or help figuring out your growth strategy and transformation process visit us at?www.valize.com.?You can follow me on Twitter @ronboire and ronboire on LinkedIn
About Ron:
Ron is a globally experienced organizational transformation specialist sought out by boards to help them navigate some of the toughest operating environments within the consumer products, technology, and retail sectors.?He has held C-level roles as CEO of Barnes & Noble, Sears Canada, and Brookstone, as well as senior leadership positions at Sony, Toys R Us, Sears Holdings, and Best Buy.?
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Principal RBaird Consulting LLC
3 年the Internet makes ‘high/low’ pricing strategy risky as you will likely sell nothing at the ‘high’ price. And the FTC rule is that you have to be at that price half the time or sell have your goods at that ‘high’ price to be able to legally advertise a savings from this ‘high’ price.
Global Advisor and Executive Coach | Keynote Speaker | Board Member | Public Company CEO | Angel Investor | Best Buy | Sony | Barnes & Noble | Partner at Valize | Principal at the Upland Group |
3 年The good news continues... my $5.00 rebait is approved and "on the way"! It's hard to contain my excitement.
Principal RBaird Consulting LLC
3 年Best Buy was the first Big Box retailer to eliminate the rebate breakage game
National Key Account Manager at Resideo | Supporting the First Alert and Honeywell Home brands of retail products
3 年You’re spot in Ron! This type of pricing camouflage needs to go away. Relying on breakage to hit your profitability forecast is unreliable and risky. As customer loyalty continues to dwindle to a “once upon a time” storyline, retailers and suppliers need to adjust their strategies to stay relevant. Rebates are not helping IMO.
Discount Tire (a company with otherwise good customer service) had a rebate program a few years ago that felt like "Most Extreme Elimination Challenge" to navigate (I believe it required a native download and a long manual code entry plus 30 day turnaround). The message was "we don't want your business if it means we have to discount it."