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FrontMatter<br />
ity that discounting and promotions<br />
condition the buyer to expect lower<br />
prices. This customer mindset makes<br />
it hard to raise prices later when times<br />
are better,” he writes. “In addition, in<br />
what Accenture calls the discount trap,<br />
a reduction in price requires a stiffer<br />
increase just to bring the price back to<br />
par—thus a 30% drop requires a 43%<br />
increase. So customers are likely to<br />
perceive future upward price adjustments<br />
as larger than the discounts.”<br />
Nunes says companies should ask<br />
themselves several questions before<br />
deciding whether to consider price<br />
cuts:<br />
➤ Do customers still need your specific<br />
products? Do they have attractive<br />
alternatives they could purchase<br />
instead?<br />
➤ What benefits do your customers<br />
gain by choosing your products over<br />
8 | <strong>BedTimes</strong> | May 2009<br />
➤ Learn more<br />
The Futures Company’s “Dollars<br />
& Consumer Sense” survey of<br />
1,002 consumers over age 18 was<br />
conducted by phone in January.<br />
To learn more about purchasing<br />
the full results, check<br />
www.yankelovich.com.<br />
(Yankelovich in Chapel Hill, N.C.,<br />
and London-based Henley Centre<br />
HeadlightVision merged recently<br />
to form The Futures Company.)<br />
your competitors?<br />
➤ Do you offer unique services or<br />
delivery capabilities?<br />
The answers will help you segment<br />
customers by their price sensitivity.<br />
If you must discount, Nunes says,<br />
companies can follow a number of<br />
strategies. For instance, he says, “Be<br />
mindful of the customer’s ‘paycheck<br />
cycle.’ The Wall Street Journal recently<br />
reported on how companies are successfully<br />
discounting based on how<br />
close customers are to payday. All buying<br />
power is relative—and it can vary<br />
greatly from week to week and even<br />
from day to day.”<br />
Companies like factory directs<br />
could benefit from Nunes’ suggestion<br />
to offer customers options like<br />
layaway.<br />
“These payment-deferral programs<br />
are back, enjoying a revival<br />
among some retailers like Kmart, for<br />
example,” he writes. “And a new firm,<br />
eLayaway, has updated the concept,<br />
allowing customers to choose products<br />
from about 1,000 local retailers<br />
online.” BT<br />
www.sleepproducts.org/bedtimes
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