A Better Alternative to Price Increases…or Discounts

When marketing any product considered aspirational, upscale, or exclusive, marketers would do well to
pay attention to the luxury market, particularly fashion. It’s often a precursor to consumer attitudes and
views about other products. This applies to wine and spirits, food and beverage, beauty, skincare and
many other products that are directed at consumers with the discretionary funds to buy them.

In “Why consumers are questioning luxury’s markups”, Vogue Business probes the impact of the
democratization of what goes into a brand. They quote Dana Thomas, author of “Deluxe: How Luxury
Lost its Lustre”, on what she sees as the impact of consumers’ desire to know how products are made
and what’s behind a brand:

A push to democratize luxury has altered its raison d’etre, says Thomas. She argues that perceptions of
‘luxury’ are now down to aspirational marketing and branding, rather than quality. “We’re not buying
things for what they are but for what they represent. The main thing you’re paying for now is the label
on the front.”

That’s true for so many products and consumers are having their fill of it. Yesterday, WineBusiness
Analytics/Sovos ShipCompliant, noted that wine shipments are down 21% in volume and 15% in value
from a year ago. You can speculate all kinds of reasons, such as drinking moderation, but we don’t have
to look much further than the rising prices all consumers are seeing across even the most mundane
products. Consumers, including the most well-off ones, are saying “Enough!” and are beginning to buy
less or, in the case of many high-end products, focusing their purchases on a smaller selection.

Nearly every day, I get an email from wineries offering a discount on their wines. Why did they bother
raising prices to begin with if they’re going to offer a percentage off? That creates an assumption that
prices were too high and it’s only a race to the bottom as consumers expect even more taken off the price. In the case of wine and spirits, food and beverage and increasingly in beauty and skincare, product equivalency is common and packaging and marketing become the difference. Walk into any wine store or in the case of beauty and skincare, a Sephora store, and you’ll see thousands of glittery labels or packages. Every consumer has their favorites but the search for lower priced substitutes is picking up pace.

Vogue business quotes the CEO of secondhand reseller Luxe Collective, Ben Gallager saying, “TikTok has democratized everything. Now you can’t hide anything.” As today’s well-informed consumer learns
more about costs, ingredients and production processes, they are making their objections known with
their wallets. The lesson for marketers is that if you’re going to raise your prices, you better have a
reason that your customers will understand and accept.

Is there an alternative to raising prices that may increase sales?
Many companies seem to think that will come from sending a barrage of emails at their customers to
the point where there are now around 350 billion emails a day sent across the globe. It’s estimated that
95% of them go into spam folders, are unread or quickly trashed. The email blitzkrieg is wearing out its
welcome with consumers.

What creates a customer who buys and repeatedly buys again?
Do you think it’s an onslaught of emails, a steady discounting of prices or a good customer relationship?
The answer is obvious but then in this digital world, how can you create a relationship that will show
your customers that you are listening, understand them and responding to their needs and perceptions?

Email platforms have not evolved past the point where they can only send information on transactions.
They’re saying “here’s what you bought last time. You should buy this now?” But more often than not,
consumers are saying they’re interested in something else. It could be different product benefits,
features, prices, origin. Who knows? And you won’t know unless you ask and respond.

Here’s my pitch and it’s a simple one. We’ve created a platform that enables you to ask your customers
what they want and why. Then you can segment them by their interests, needs and perceptions and
email them content that addresses the needs of each individual. That’s what 1:1 marketing at scale is
and it’s only common sense that you’ll do better when you treat your customers as individuals.

How does that help you if your customers revolt against markups? You’ll know who is complaining and
why down to the individual and you’ll know who loves what you do and why and you can nurture those
relationships for the better. Isn’t that what good marketing is about?