Fighting the impulse to lower prices
We know boat sales are being made at the fall shows. That’s the good news! But, they’re driven by lowering our prices and killing our margins. Hey, these days dropping price is more prevalent than President Obama on TV. That’s not good news (lowering prices, I mean!) Discounting is out of control. Why is it that when the economy slows, we knee-jerk to dropping our prices? Sure, there are times when discounting makes good marketing sense. But it’s like a drug . . . it’s addictive. Just ask auto makers or big box stores – they have literally addicted their customers to shop only “on sale!” So, they’re now stuck in a continuous discount rut. Oddly, in a similar way, we’ve “trained” boaters to doubt that our boat show specials are really special . . . because we foolishly run ads right after our shows proclaiming ”boat show prices still in effect.” Now that’s a believability killer!
But, if we’re going to give away our profits, marketing experts say discounting should be unusual and only in a disciplined plan to achieve a distinct objective – like, move out all center consoles. Moreover, there may be even better ways to make sales happen.
Promoting big discounts on “everything in stock,” particularly these days, can lead customers to see a red flag and conclude you’re desperate or in trouble. The better choice, for example, is to designate a specific model that’s on sale for a definite time. Moreover, it’s really critical to your credibility that you stick to it – when the time is up, it’s up, period!
An even better choice is to increase value rather than just hack up prices . . . again, on a selected model(s) for a defined time, not on everything in sight at the same time. If the experts are correct, the post-recession buyer we’re now facing is more concerned with value than ever before. It’s logical – because with many choices in boats, and the fact that there really is so much product parity today, dealers can only differentiate their boats by adding value others don’t.
In addition, studies indicate the post-recession consumer now looks at major purchases like boats in a much longer-term perspective. Accordingly, adding free packages ranging from desirable amenities they would likely add anyway to complete maintenance services for an extended period could be viewed as the increased value that will cause these buyers to close.
So make your discounting decisions carefully and as part of a smart marketing plan. You’ll likely profit from it.