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The First Promotion Always Makes Sense. That’s the Problem.
Five things promotions do to a brand.
My inbox has been overflowing with sales emails these days. Not just from retailers, but from brands as well. Mid-summer promotions, last-chance offers, limited-time discounts on products that were full price a week or so ago. They won't stop until back-to-school kicks in later this month, and the calendar rolls into fall. This is the summer promotional season, and it belongs to every category, not just beauty.
Retailers are running promotions because that's their model. It is expected and largely outside a brand's control. What's worth talking about is what happens when brands decide to run their own promotions. A retailer discounting a product and a brand discounting its own product are not the same decision, and they don't send the same signal to the market. The consequences are different, and most brands don't realize that until it's too late.
It's a tough situation for brands and, in reality, there are only three real options.
- Keep the DTC price and let the retailer promotion stand alone. Uncomfortable and tough, but defensible. It requires confidence in both the product and a DTC channel worth paying full price for because of better service, exclusive access, or a relationship the retailer can't replicate.
- Run a promotion on top of the retailer's. This feels like leveling the playing field. It isn't. Now the market has received two separate signals that the price is negotiable.
- Use incentives instead of discounts. Free shipping. A complimentary sample. A gift with a minimum order. These reward the buyer without touching the price, and more importantly, brand value.
The retailer promotional calendar is not going away. The pressure it creates is no joke, but adding a discount on top of a retailer promotion is never a competitive response. It's a compounding problem, because discounting does five things to a brand, every time and without exception.
1: It devalues the brand.
The first is the most immediate and most important. A 20% off email from a brand with real credentials, sitting in the same inbox as a category-wide retailer event, tells the market the product price wasn't justified in the first place, and once this signal has been sent, it can’t be recalled.
2: It trains the consumer to wait.
This is a slower consequence, but more damaging. The buyer who paid full price last month is now doing the math. The brand has permanently changed the behavior of its most valuable customer by telling them, through their own actions, that the price was negotiable all along. They just have to wait.
3: It attracts the wrong customer.
This one intensifies over time. Price-sensitive buyers come for the deal, and when the deal ends, that’s their end, too. The brand has spent margin to acquire a customer it cannot retain while simultaneously telling its core buyer that they paid more than they had to.
4: It forces the brand to argue against itself.
The fourth is structural and largely irreversible: A summer promotion and a premium product line are not compatible signals. They are competing arguments about what the brand is. One of them will win and it’s typically not the premium one.
5: It signals weakness to everyone watching.
The fifth is competitive intelligence the brand is giving away. Every competitor now knows the brand is discounting. That information travels faster than any press release.
The inbox will keep filling up with summer sale emails and soon back-to-school promos. The retailer events will keep running, too, and the pressure to participate will keep popping up in every planning meeting between now and the holidays. The question isn't whether the category discounts. It's whether a brand does, and what that choice compounds into over the years of making the same reasonable-feeling decision in the same pressured season.
The brands that maintain their price, like Apple, don't do it because they're indifferent to the pressure. They do it because they've decided what and who they are and they're not willing to stop being that just because it's summer.
What is your brand leading with when the sales numbers disappoint — the truth, or the discount?
