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Don't Let This One Get Away!

January 20, 2010  

One notable effect of the economic downturn is the marked increase in consumer frugality. Marketers near and far are in hot pursuit of savvy pricing strategies that prod wary customers into buying.

Well, here's a tactic that some researchers say is worth a try: "steadily decreasing discounting" or SDD.

In a recent study, these researchers worked with a kitchen store to offer promotions of wine-bottle stoppers. They employed both SDD and a hi-lo pricing strategy, a much-used tactic in which sellers set relatively higher everyday prices but offer frequent price promotions.

  • In one test, the hi-lo strategy offered the stoppers (regularly priced at $24.95) at 20% off ($19.95) for three days and then returned them to full price.
  • In a separate test, the SDD promotion offered the stoppers at 30% off the first day ($17.45), 20% off the second day and 10% off the third day ($22.45).

Results: The hi-lo tactic increased sales by 75%; SDD increased sales (averaged to $19.95) by 200%.

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