This here, I thought was a fascinating article on the marketing strategy of Coles. What they advertised themselves as cheaper, cheaper, cheaper and it backfired I think. As expected they did very well in turnover, but they felt it in profit. In my experience, the primary beneficiaries of a cheaper campaign are your own customers who are buying the goods now at full price. Plus we all, if we have too, can be cheaper if required. The other problem is why are the products cheaper, if its because they are inferior, in the long term the customer is going to remember the inferior goods long after they forgot what they paid for it. That is why we have always only sold quality items.
If you really want to try such a campaign, it is easy to monitor its effects using our pos software.
So what is the result of Coles cheaper campaign, which I believe they won in sales but they have now a "drop in earnings of 14.1% from A$920 million to A$790 million. In contrast, Woolworths announced an 11.1% increase in earnings for their supermarket business." so what is Coles doing about it, they are moving away from competing in price more into loyalty programs and "service quality, social programs and connecting with the community."
I think this article is well worth a read.
