Getting to grips with pricing (how excessive discounting can damage a supermarket’s business)

Citation

Bainbridge, J. (2011), "Getting to grips with pricing (how excessive discounting can damage a supermarket’s business)", Strategic Direction, Vol. 27 No. 10. https://doi.org/10.1108/sd.2011.05627jaa.006

Getting to grips with pricing (how excessive discounting can damage a supermarket’s business)

Article Type: Abstract From: Strategic Direction, Volume 27, Issue 10

Bainbridge J.Marketing, May 2011, Start page: 24, No of pages: 3

Reports how, as UK brands face growing pressure from supermarkets, and strive to satisfy cost-conscious consumers, many are finding themselves drawn into a dangerous discounting spiral that threatens to lead to rapidly dwindling margins. Explains that, as the country makes its slow recovery from the recession, brands’ pricing strategy, allied to the dual challenge of the rising costs of raw materials and supermarkets dictating retail price points, has led some marketers to lose their control on pricing, with dire consequences. Reports the results of a recent questionnaire survey, undertaken by KPMG, involving 200 UK business leaders, and covering the financial services, retail and consumer goods, telecommunications companies (telcos) and utilities sectors, which estimated that UK profits have been reduced by over 20 billion pounds sterling as a result of recessionary discounting. Reveals that over 50 percent of the respondents claimed that they had reduced prices across the board, while 49 percent had entered into price wars with competitors. Concludes that, while the relationship between brands and retailers might be fraught at times, there is always the unifying factor of wanting to win over the customer and build loyalty, therefore good-quality customer research that benefits both the brand owner and the retailer remains one of the most powerful tools marketers have at their disposal. Provides a brand perspective by Simon Duffy (Bulldog), and a retailers’ perspective by Jon Owen (Asda).Article type: ViewpointISSN: 0025-3650Reference: 40AL404

Keywords: Brand management, Competitive advantage, Discounts, Marketing models, Marketing philosophy, Marketing planning, Marketing strategy, Marketing theory, Organizations, Prices, Retail trade, Shopping, Strategic marketing, Surveys, United Kingdom