Another marketing observation

[Forrest]

I just finished another audiobook about what makes things catch on. Form the standpoint of selling craft products there was particularly interesting chapter on having sales. The author referred to a study done by a major catalogue retailer where they mailed two versions of the same catalogue, except in one a group of dresser were listed as Preseason Sale. The prices for those items was the same in both catalogues but sale were 50% higher for the ones listed as preseason sale. There was a lot of information in that chapter but the gist of it was people like sales. Let’s say you have a candle that you sell for $10, why not sell it for $12.50 and put it on sale for 20% off, you would sell more of them. Another thing increases sales is limiting the quantity people can buy. So sell that $10 candle for $12.50 for 20% off with a limit of 3 per customer. Another thing that increases sales is having something available for a limited time. The McRib at McDonald's was a total failure as a regular menu item, but a huge success as a limited time item. So maybe you have some spring scents that you don’t sell in the fall, that’s a limited time. You have to be careful not to over use these strategies as people will start viewing them as the norm, think Hobby Lobby.

Your big retailers always overprice their merchandise and use sales to increase volume. They only make money at Christmas, or when they have a big sale. I once went to the grocery store to buy coffee and was shocked that the price had gone up so much in a week, then I saw the BOGO sign, when I calculated it out I saved about 35% off their regular price.  

So that is what I got out of that book that is applicable to selling craft products to the public. There was one other thing, Malcolm Gladwell’s The Tipping Point has some good information, but a lot of it doesn’t match the research that has been done since it was written.  

[pughaus]

the down side of neverending sales or marking up so you can mark down is that you train your customers to wait for a sale and never pay full price.  I'm not a fan of that approach and while it's a common pricing strategy in dept stores, it's also true that the very dept stores that use that strategy are pretty much failing across the board.  Also, crafters aren't mega retailers and have very different business models and appeal.

 

I don't mind rare sales for say, closing out a collection that's being discontinued, moving out some excess seasonal goods, or for very limited times- like a one day 20% off flash sale for your VIP buyers only-  but personally, I wouldn't use mark downs as a regular marketing strategy; especially not for handmade, small production goods whose appeal should not be low pricing but rather, quality, limited qtys, uniqueness...
 

I do like incentives that encourage people to buy more or add on: like a buy 3 get this free or buy 4 get free shipping type of thing.  I especially like targeted marketing and keeping your loyal customers with you by offering them 1st dibs at a new fragrance, exclusive candle of the month specials.. etc.   IOW discounts + perks should be reserved for your best customers with the goal of keeping those customers loyal and not necessarily for luring in new accounts.  (full disclosure: I'm a Dir. of Marketing )

[TallTayl]

2 minutes ago, pughaus said:

 

 

I do like incentives that encourage people to buy more or add on: like a buy 3 get this free or buy 4 get free shipping type of thing.  I especially like targeted marketing and keeping your loyal customers with you by offering them 1st dibs at a new fragrance, exclusive candle of the month specials.. etc.   IOW discounts + perks should be reserved for your best customers with the goal of keeping those customers loyal and not necessarily for luring in new accounts.  (full disclosure: I'm a Dir. of Marketing )

This strategy has worked most effectively for my model.

 

Examples that work in my summer shoppe:

soap - $6 each, 4/$20. 

Tins - $11 each 3/$30

tiny tapers, $2 each buy 5 get 1 free

 

etc etc etc,

each purchase is packaged in a logo stamped muslin bag that shouts quality. 

 

the vast majority go for the multi purchase to “save” $.

 

when I went the discount price route it attracted the wrong type of customer for my business model. Seemed I could never satisfy those people as well as those looking for first-run, exclusive products. I built the Faire market on personal relationships. We are invested in each other. Bargain hunters rarely stick around long with me. 

[TallTayl]

Oh, and for online purchases, I have a tiered gift offer. 

$15 and under get a soap sample, or similar.

$15- 40 get a lip butter or similar item

> $40 get a ceramic diffuser pendant or ornament

> $75 get free us shipping. 

 

Was interesting to see see how people configured orders to get the next tier of prize. 

 

The diffusers and ornaments I've begin to make with my new trademarked brand logo. They get a pretty gift and advertise my brand in one go.  🤩

[Forrest]

48 minutes ago, pughaus said:

the down side of neverending sales or marking up so you can mark down is that you train your customers to wait for a sale and never pay full price.  I'm not a fan of that approach and while it's a common pricing strategy in dept stores, it's also true that the very dept stores that use that strategy are pretty much failing across the board.  Also, crafters aren't mega retailers and have very different business models and appeal.

 

I don't mind rare sales for say, closing out a collection that's being discontinued, moving out some excess seasonal goods, or for very limited times- like a one day 20% off flash sale for your VIP buyers only-  but personally, I wouldn't use mark downs as a regular marketing strategy; especially not for handmade, small production goods whose appeal should not be low pricing but rather, quality, limited qtys, uniqueness...
 

I do like incentives that encourage people to buy more or add on: like a buy 3 get this free or buy 4 get free shipping type of thing.  I especially like targeted marketing and keeping your loyal customers with you by offering them 1st dibs at a new fragrance, exclusive candle of the month specials.. etc.   IOW discounts + perks should be reserved for your best customers with the goal of keeping those customers loyal and not necessarily for luring in new accounts.  (full disclosure: I'm a Dir. of Marketing )

Great post! I try to look at these books for their applicability to candle sales, but I haven’t ever sold a candle so my experience is lacking. Perhaps having occasional sales would be a good idea for someone who is just getting started, then as they built a customer base they could switch to other forms of promotion.

[birdcharm]

Another thing in regard to candles that could be built into marketing is lower pricing per ounce as the size of the container goes up.  This is probably a fairly common practice due to the fact that a larger candle doesn't take much more effort to make than a smaller one -- the only thing that really increases are the raw materials.  We see this quite often in scent pricing, as the rebottle/packaging/packing of a small bottle costs almost as much as a larger one, so there's a price break for more quantity.

 

 

[Quentin]

13 hours ago, Forrest said:

There was a lot of information in that chapter but the gist of it was people like sales. Let’s say you have a candle that you sell for $10, why not sell it for $12.50 and put it on sale for 20% off, you would sell more of them. Another thing increases sales is limiting the quantity people can buy. So sell that $10 candle for $12.50 for 20% off with a limit of 3 per customer.

This is GOOD stuff here. I'm printing this one.  My first job the summer after college was in a jewelry store. I guess after they figured they could "trust" me, they put me to work taking the invoices (which showed the cost) then I was told to mark that up according to their system. Take a gold chain for example. Invoice reads that the cost is $50.00, I was to price it and tag it at let's say $300.00. I was just following orders . Then they would have a super colossal 50% off sale. The gold chain goes on sale at $150.00 and everyone is happy. Thanks Forrest for passing that on to us.

[Quentin]

7 hours ago, birdcharm said:

Another thing in regard to candles that could be built into marketing is lower pricing per ounce as the size of the container goes up

When I take my father to the grocery store, he always has me grab the smallest bottle of whatever. I can't convince him that the bigger bottle is the better deal even when I point out the price per ounce on the price sticker.

[Quentin]

@Forrest I don't think you mentioned the name of the book. I'd like to read it.

[Forrest]

4 hours ago, Quentin said:

@Forrest I don't think you mentioned the name of the book. I'd like to read it.

The book is Contagious: why things catch on by Jonah Berger. He is a  a professor at Wharton, and this is his area of expertise, but the book is an easy, and interesting read.

[Quentin]

On 8/31/2018 at 2:40 PM, birdcharm said:

Another thing in regard to candles that could be built into marketing is lower pricing per ounce as the size of the container goes up.  This is probably a fairly common practice due to the fact that a larger candle doesn't take much more effort to make than a smaller one -- the only thing that really increases are the raw materials.  We see this quite often in scent pricing, as the rebottle/packaging/packing of a small bottle costs almost as much as a larger one, so there's a price break for more quantity.

 

 

I've been thinking about your idea. I like it. How would you calculate something like that? I wouldn't know where to start.