Black Friday Promotes Unhealthy Marketing Habits

This Friday, millions of fearless shoppers will take on long lines and overcrowded stores in hopes of getting the best deals of the shopping season. I, of course, am referring to Black Friday, the most sacred shopping day of the year. Big Box Retailer Target is even encouraging shoppers to train for the big day.

According to a preliminary Black Friday shopping survey conducted for the National Retail Federation, 138 million people said they plan to shop Black Friday weekend 2010, four million more than last year.

The amount of consumer excitement that is generated by Black Friday promotions is simply incredible. Many small business owners look at what’s going on in the marketplace and think to themselves, “We would be set if we could just get a small piece of this pie.” So what do they do? They offer their own Black Friday deal…and it works! Customers flood their store and the line is out the door.

“Wow,” you think to yourself, “I should do this more often.” And sure enough you do it more often, because it gives people motivation to buy from you. In fact, your customers will love you for it because everyone loves getting a discount. But believe me that chronic discounting is the beginning of a long, slow death for most businesses.

This is because people become conditioned to buy from you based solely on price. Before you know it, even your most loyal customers will no longer buy from you unless they have a coupon. It’s the principle of anchor pricing: once people buy a particular product at a particular price, they become anchored to that price. For instance, look at the national pizza chains. It wasn’t that long ago where consumers would willingly pay $15 for a large pizza with the works. However, thanks to deep discounting and $10 “any way you want it” deals, these chains can no longer command the higher price; consumers have become anchored to the $10 pie.

Now don’t get me wrong, not all promotions are bad, but you should strive to add value rather than discount the price. Some ways to add value would be to offer free shipping, a warranty, or a 30-day no questions asked return policy.