By Paul Sherratt of Solutions for Sport
In my discussions with brands, sports retailers and sales teams, the selling price to both the customer and the end consumer is often discussed.
Inevitably, end consumers want the best price. However, is this the only criteria we use when choosing goods and can brands and retailers be smarter in their pricing strategies in order to increase prices and margins?
If we take price out the equation, what other factors should we be looking at from a brand and retailer perspective?
This is key. The product pipeline must be continually full and whether sports brand or retailer, without appropriate, attractive and relevant product a business cannot evolve.
Over the past 10 years, we have seen more niche areas of the industry being driven by product development, as ecommerce has allowed retailers to push more specialist products into a bigger specialist marketplace.
Because of the nature of these products, consumers don’t expect to see them discounted, so the retailer who immediately cuts the price of a new line is simply giving margin away. New product launches are the time to make hay and maximise margins.
Retailers should take advantage of the marketing tools often available around new launches and piggyback on the brand spend to drive consumers to their website or store.
If we compare brand and retailer activity with, for example, that of the grocery trade, we often fail to utilise some powerful marketing tools.
Added value promotions; buy one, get one free; voucher redemptions; staff incentives; gondola end promotions; and direct call to action initiatives are all areas we recognise as end consumers in other sectors, but not necessarily in the sports market.
When used strategically, these tools can be extremely beneficial and allow additional points of difference versus the competition. These approaches work both online and in store and, most importantly, do not necessarily result in margin erosion.
Determine what the ideal locations are to convert potential clients into actual ones.
From a brand perspective, this might be a trade show, shop visits or dealer trips. For sports retailers, it will depend on your route to market.
Place is the one that, on the surface, appears less relevant, but is arguably having the biggest impact on the sporting goods marketplace. Put simply, the places where goods are being purchased are changing.
Channels are merging – running and outdoor, embroidery/embellishment and sport, mail order and ecommerce, etc. For sports brands to evolve, they must address these changes and find this new business and the place where it exists.
As ecommerce becomes more important, where does that leave packaging? The balance between the brand/product message and the opening experience continues to evolve. The unwrapping of the package has become a vital part of the consumer experience and thus brands must address this.
Sport at any level has a performance element. To compete, particularly in niche product areas, product performance is vital.
Purchasing decisions are not exclusively based on price. If they were, Aldi would be the dominant player in the supermarket sector and Waitrose wouldn’t survive.
Factors such as emotions, ideals, shopping environments, moods and peers are the real influencers. Think about what your business is good at – service, added value, promotions, specialist products – and use those key strengths to counter the price argument.