The End Of Marketing Based on Price and Discounts

With the biggest season of sales occurring right now, where door crashers and deep discounts are used to get customers through the door. To the website. To buy and fill shopping carts. It’s also the first and most commonly used marketing tactic.  Winning on discount and price, an effective and needle moving tactic that has worked for ages is about to be disrupted.

Retailers and the manufacturers of the products they sell will see this disruption come as digital technology enables the consumer to purchase programmatically.  Much as marketers today are being enabled to buy media and ad space programmatically. Consumers will be empowered through apps and purchasing the products they want at the best price possible. By setting target buy points on price, with orders being placed through programmatic systems and delivered on demand.  While I don’t think any one pricing aggregator has created the perfect system yet, it’s only a matter of time.

What this means for the retailers and the sellers, is that winning on pricing will become death by a thousand cuts, eroding at margin, and ultimately forcing retailers to compete on unique products and skus.  All of which we first started to see when price matching became a strategy for retailers to ensure they always closed the sale.  Pricing as a strategy is becoming the lowest commodity in the marketer’s bag of strategies and tactics.

The suppliers of the retailers will now need to consider more than ever what products they sell through what retailers, and how to create bespoke offers unique to each retail partner.  Some suppliers already use this strategy by creating unique skus for each major retail chain or partner, to limit channel conflict and enable them to differentiate across partners, but often these skus are just logistic or minimal changes and not feature rich changes.  

In a big data world marketers need to get smarter, and even more focused on their segmentation, and not just by buying behaviour, but understanding location to enable speed of delivery or pick-up, frame or state of mind (research, consideration, purchase), and looking at connected partner services in which first party and third party data are used to hone in and target the consumer beyond the traditional DMP uses today, in which this data is collected across all digital channels and connected devices. The marketer will need to have an understanding of the additional consumer needs based on all of these data points.  Customer personas will become irrelevant in building out your marketing plans as you move from linear planning to connected experiences that follow you everywhere, and change as you change, as your family changes, as your experiences change you and how you think and engage in this world, your marketing experiences will change with them, moving from intrusive push messages, to recommendations, and moments of trust, because we know you better than we ever have before.

What consumers will see is a shift to homogenized price point across all sales channels, and instead differentiators such as unique features, exclusive content, and partnered products to deliver more value to that customer.  We’re already seeing this happen in the video game and movie space, as games come bundled with exclusive players, attributes, game challenges and more specific to different retailers, we see exclusive blu-ray content and packaging for major movie releases.  But what if those retailers could use the data they have on you to provide even more bespoke offerings that speak to your specific needs through mobile information provided in your phone, as you research product features.  Retailers will be looking to appeal to the consumers desire to own unique or specific content, at the same time looking to minimize the collectors frustration of having all features and growing revenue through additional attachments to the product

Lastly you will see a shift away from marketing to the consumer and marketing to the automated systems.  As you establish trust and relationships with digital services integrate into mobile phones, IoT (internet of things) enabled devices, and wearables, which provide inputs and outputs to your unique needs and provide push content that is recommended to the consumer.

When this happens how will marketers approach algorithmic marketing programs?  How will they enable real time dynamic offers, that adapt to users needs, and adjust based on propensity to purchase?  And which devices will be responsible for managing the propensity models?  Will that reside with IoT devices, with wearables, to monetize the end users, or will it be an open system that provides many data points, but no reference for how to interpret it?  What will you do when we move from a Loyalty Points and Rewards drive to a Recommendation and Trust based model for purchases that disrupt your life time value? All of these things are exciting and great opportunities I believe marketers need to start to consider today.