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(1/6) For DNVB > $10M in annual revenue:
Begin segmenting revenue across products and customers by Price Type: Full Price / Promotional / Markdown
Build strategies to grow Full Price (flywheel) while limiting Promotions and Markdowns
Begin segmenting revenue across products and customers by Price Type: Full Price / Promotional / Markdown
Build strategies to grow Full Price (flywheel) while limiting Promotions and Markdowns
(2/6) The fundamental challenge is that repeatable growth becomes more difficult and marketing performance is positively sensitive to price as an influence on Demand (elasticity). Price becomes the lever that is most easily pulled instead of developing flywheel focused strategy
(3/6) Over time, sales and marketing metrics become bloated, which leads to a toxic cycle of being forced to repeat (worse, deepen) discounts and promotional events, or lower growth targets. If this activity persists long enough, you will begin to erode the brand equity
(4/6) This also navigates you away from your target customer, towards a customer who’s demand profile is inherently price driven, which means they are more easily lost to other brands who are willing to undercut even your lower prices (“race to the bottom”)
(5/6) This negative activity may also pollute your supply chain. In order to support growth at lower margins, you’re forced to buy more inventory to meet demand and hit growth targets. Supply chains often carry inertia that is difficult to reverse
(6/6) The point here: Off-Price growth isn’t sustainable, and like any other drug will make you sick over time and in heavy doses. It will cloud your judgement if you are not focused on the symptoms and causes.
Alternate solution: never lower prices
Alternate solution: never lower prices
