Avoid The Discount Death Spiral

With Black Friday on the horizon, brands face intense pressure to cut prices. But just because everyone else is doing it doesn’t mean you should. Saying “no” to discounts might be one of the smartest moves you can make. Here’s why.

1. Discounts Damage Your Brand Image

Building a brand isn’t easy, and part of what differentiates it is the higher perceived value. Discounting puts that hard-earned perception at risk. High-end brands, in particular, are built on their quality and exclusivity. Customers expect to pay more because they trust it’s worth it. Cutting prices might satisfy some shoppers, but it can alienate your loyal base, who may turn to competitors that still feel exclusive.

2. They Erode Your Profit Margin

Discounting eats into your profit margin, which is already a tightrope for most businesses. With every discounted sale, your resources for reinvestment in brand marketing shrink, making it harder to stay top of mind with consumers. For some brands, excessive discounting can even lead to existential risk, eventually forcing cost cuts, layoffs or even closure.

3. Consumers Will Stockpile

Promotions can lead to short-term volume boosts, they often mean future sales decline. Consumers are likely to stockpile during promotions—especially for non-perishable goods—and then delay purchases until the next sale. The result? Little to no actual increase in long-term sales volume.

4. DISCOUNTS Don’t Drive Meaningful Trial

While promotions may attract some new buyers, these are often customers already familiar with your brand. They buy on discount because they already know it’s a good deal. New buyers drawn in by price alone are typically not brand-loyal and will likely move on to the next promotion from a competitor.

5. DISCOUNTS Are Easy to Copy

Once your brand dives into price promotions, others will follow. Any competitive advantage you gain is temporary. After your promotion ends, consumers simply switch to the next brand on sale, creating an ongoing cycle of promotions.

6. DISCOUNTS Tend to Escalate

The more brands discount, the more aggressive promotions become. “Buy one, get one half price ” becomes “buy one, get one free,” and so on. As deals escalate, margins erode further, brand equity suffers, and the credibility you’ve built with your customers weakens.

7. The Whole Category Can Become Commoditised

When everyone competes on price, brands lose differentiation. Consumers learn to buy by deal, not by brand. This is great for bargain hunters, but over time, it favours low-cost options and own-label alternatives, which will always undercut you on price. Discounting devalues the entire category.

Summary

It’s tempting to join in on the discount bandwagon. A quick boost in sales can feel good in the moment, but in the words of Talking Heads, you’re ‘on the road to nowhere.’ While price promotion is the most directly measurable of the 4Ps, it’s also the one that can be most damaging.

The bottom line? Make sure your brand is worth the price you charge and avoid the allure of Black Friday. Consider the stance of outdoor retailer REI Co-op, which famously refuses to participate. It may be the best way to protect the value of your brand.

How We Fell Out of Love With Brand Loyalty

The golden age of loyalty

When I studied marketing in the 1990s, achieving ‘brand loyalty’ was the Holy Grail of marketing. The accepted doctrine was to focus your marketing efforts on heavy users - the loyalists. The goal was to encourage them to buy your brand exclusively.

We believed in Pareto’s Law: 80% of your sales come from 20% of your consumers. We read studies that persuaded us that acquiring a new consumer was much more expensive than retaining existing ones. We believed in the idea of ‘lifetime customer value’. That people who bought our brand could stay with us forever.

I remember reading a bestselling book written in 1993 by Peppers and Rogers called The One to One Future. It envisioned a future where businesses moved away from mass marketing. Where we tailored offerings to meet each customer's specific needs and preferences. ‘Relationship marketing’ was all the rage. Loyalty schemes exploded. Look after your loyalists was the mantra. Don’t worry about the ‘mass market’.

It was a very seductive idea. Loyalty is good, isn’t it? We didn’t want people buying other brands. We wanted people to love our brands. We didn’t want to ‘waste’ our money on fickle consumers. It was much better to focus marketing funds on your loyalists.

When did this all change?

The big shift in these beliefs came with the work of the Ehrenberg-Bass Institute.

I remember a famous Andrew Ehrenberg quote.

‘Your customers are the customers of other brands that occasionally buy you’

Then there was the release of Byron Sharp’s seminal book in 2010, ‘How Brands Grow’. The key thesis of the book was that brand growth is more likely by gaining new users. In other words, by increasing penetration/acquisition. The research was robust and persuasive. They were presented as a series of new marketing ‘laws’. We were shocked to learn that loyalty programmes don’t work. That the Pareto Law is over-stated. That all the doctrines around loyalty were false.

Not everyone agrees with the laws in the book, but other studies support the argument for a more ‘mass marketing’ approach to brand building.

A famous study by Binet and Field called ‘The Long and Short of It’ analysed the IPA database. It made the case for long-term ‘brand building’ communication. It asserted that attracting new users was a key driver of brand growth. It concluded that we need both long and short-term marketing investments.

So is loyalty entirely discredited?

Loyalty schemes are still widespread. According to a recent YouGov poll, 9 out of 10 Britons are currently signed up to at least one loyalty programme. We join them because they’re free and because we’re looking for discounts. But our relationship with them is very transactional. Just because we’ve joined a scheme, doesn’t mean we’re loyal.

Once a brand has started a loyalty scheme it’s hard to exit it or reduce the benefits, without a consumer backlash. Brands who run them are stuck with them.

It’s argued that some brands evoke a high level of ‘brand love’. But these are rare. Every brand has its fanatics, but most of us simply like brands. We don’t love them.

What’s the current doctrine?

Some people still believe in the importance of loyalty. Marketers find it hard to let go of the idea that people don’t love their brands unconditionally. And many people get paid to run loyalty schemes.

However…

Nowadays, it’s understood that people buy across a repertoire of brands. We buy what’s easily available. We buy brands that we can easily remember.

We accept that customer acquisition is a primary driver of brand growth. Case studies stress the importance of attracting the ‘broader market’ to build brand equity. We know that brands need light, infrequent buyers. The Byron Sharp camp has won the argument. Sensible brand plans focus on long-term brand building as well as activation. No one dreams of creating world-beating loyalty schemes anymore. The ‘one-to-one future’ envisioned by Peppers and Rogers in 1993 has yet to become a reality.

Marketing Lessons From The Horror Movie Genre

The horror movie industry continues to grow in importance. Since 1995 the horror genre has more than doubled its market share in the US and Canada, and it's still growing. It remains Hollywood's most reliable money maker. In an interesting change in direction, Hugh Grant is starring in his first horror movie - ‘Heretic’. It's receiving rave reviews.

So what can marketers learn from the success of horror movies and apply to their brands?

Lesson 1: horror is founded on a great insight

Horror fans tell you that being terrified is more fun when it is a communal experience. That’s why they love to see horror at the cinema. Indeed, theatrical releases are key to the ongoing survival of cinemas. Many people enjoy watching mainstream movies via streaming services in the comfort of their own homes. But horror works best in the cinema. Where we can all scream together.

There’s also a universal truth at the heart of horror movies. Everyone has felt fear in their life. It’s something we can all relate to. It’s what makes the genre so compelling.

Ask yourself: what’s the big, universal insight at the heart of my brand? What can we do to bring people together in communal experiences?

Lesson 2: Constraint leads to creativity

Many successful horror films are low-budget. They don’t rely on expensive stars, special effects, or fancy locations. Directors take risks, they experiment. For example, The Blair Witch Project relied on hand-held cameras, found footage and shaky camera techniques. Having a large budget is no guarantee of success. There are plenty of examples of big-budget, box-office flops. Most recently, Joker: Folie a Deux.

Ask yourself: how can I make the most of my limited budget? How can I become more creative and resourceful? Click here for some suggestions.

Lesson 3: The importance of ‘word of mouth’

Horror movies are less reliant on mainstream critical approval than other genres. The fans ‘find’ the films they love via word of mouth. Over time, film studios have created a series of franchises that continue to build and grow. Friday the 13th, Scream, Paranormal Activity, etc. They understand that fandom builds over time. They understand the importance of consistency.

Ask yourself: how can I create a community of fans and brand advocates? How can I continually deliver what they want?

Lesson 4: Focus on great storytelling

Successful horror movies tell great stories. A successful horror movie is beautifully crafted and immersive. At the heart, there’s a feeling of suspense and tension. There are memorable moments. A frightening antagonist. Evocative soundscapes. Many of our great movie directors started out making horror movies - Peter Jackson, Ridley Scott, Francis Ford Coppola.

Ask yourself: how can I tell great stories about my brand? How can I inject emotion and connect with my audience?

Horror movies may not win at the Oscars, but they certainly win at the box office. Marketing is all about giving people what they want. There’s a lot we can learn.

Happy Halloween to all of you!

How to Be a Brilliant Brand Manager

Over the years, I’ve worked with all kinds of brand managers. Indeed, my first ever job in marketing was as a brand manager at Nestle. This is what it takes to be great at the job.

1 Write Inspiring creative briefs

Brand managers work with a range of agency partners. The best - indeed the only way - to get great work from your agency is to write an inspiring brief. It must be clear what you’re asking them to do. It should enable them to deliver the best work possible. Agencies often complain about never receiving decent briefs. Make sure you’re not one of those brand managers.

It also makes creative judgement and the feedback process easier. When your agency delivers work, you can use the brief to guide you. Have they met, missed or exceeded what was in the brief?

2 Know your numbers

Numeracy is a key marketing skill. Many people become brand managers because they love advertising and communication. The creative side of communication. But knowing your numbers is critical. How are your sales doing? What’s happening to your marketing share? How are people responding to your communication? We’re inundated with data nowadays. Keep on top of it.

When you meet up with your senior managers they always ask about the numbers. Make sure you’re able to respond. Brand managers are often accused of lacking commercial acumen. Don’t be one of them. Demonstrate the impact your marketing efforts are having on business success. Especially to non-marketing audiences. Otherwise, you’re not taken seriously.

The numbers help you make the right decisions on where to invest your marketing budget. You can justify your expenditure or make the case for increased marketing investment.

3 Engage with your consumers

Reading marketing research reports and engaging with the data can only get you so far. You have to speak, observe or hang out with your consumers. Always look for opportunities to meet them face to face. This could be at an event, in-store, during focus groups or simply chance encounters. Ask them questions, listen to what they say. If they’re critical of your brand, don’t be defensive. Take on board what they say. Use it to gain additional understanding.

An important part of your job is representing the consumer within the business. If you don’t know them intimately, then you’re not able to do this effectively.

4 Become best friends with the sales team

In most organisations, there’s tension between different departments. This is particularly the case between sales and marketing. Getting and holding distribution is fundamental to the growth of your brand. The sales team can help you. If you have a frosty relationship with them, you won’t get their attention or support.

Work closely. Go on trade visits. Pitch together. Often, there are other brands in your company’s portfolio they need to sell. Make sure yours gets priority. Also when customers play hardball with your brand, the sales team will support you if they like and respect you.

5 Develop your project management skills

A brand manager is responsible for making things happen. A new product launch, a new campaign, a promotion. You’ve got to be a good project manager. Speed of execution is vital. People will look to you for direction. The best brand managers I worked with were always on top of the details. They’re great internal communicators. They got things done. There are a lot of project management tools to help you nowadays. Use the ones you feel comfortable with.

6 Think long term

A typical tenure for a brand manager is two to three years. Your job is to leave the brand in a better shape than when you started it. This requires long-term thinking. It’s tempting to focus primarily on brand activation and chasing short-term sales. You’re keen to make your mark.

Spend time on the long term. It means getting deeply involved in strategic planning. It means developing communication that focuses on brand building as well as activation. Growing awareness, attracting new users, and creating equity takes time and may not yield immediate results. But they’re fundamental to your brand’s long-term health. Don’t neglect these elements.

7 Always Remain a Student of Marketing

There’s always more to learn. Marketing continues to evolve. You need to evolve with it. You need to understand how to use new channels of communication, the impact of AI, new ways to conduct market research, the latest academic thinking on how to grow brands.

Read books, follow your favourite thought leaders. There are lots of agency publications, podcasts, magazines, trend reports, free webinars. Continue to add to your accumulated knowledge. Incorporate the latest thinking into the way you manage your brand.

Summary

Being responsible for the success of a brand is a great honour. Particularly brands that play an important role in people’s lives. I look back on the brands I worked on with pride and great affection. Being a brilliant brand manager requires a diverse set of skills. Numeracy, creativity, project management, data analysis and critical thinking are all important. Skills that will stand you in good stead throughout your brilliant career.

I Love the New Burberry Campaign

It’s no secret that Burberry has had a difficult time recently. Burberry's sales have been falling, especially in China, one of its core markets. As a result, the CEO was replaced in July 2024. Indeed the whole of the luxury brand sector is suffering. This month, even the giant conglomerate LVMH reported a 3% decline in sales.

In October, Burberry launched a new outdoor wear campaign under the banner, ‘It’s Always Burberry Weather’ and I love it.

Here’s how it’s explained on the Burberry website.

‘It’s Always Burberry Weather’ is taken from a slogan in the Burberry archive, which references the robust elements of the brand’s garments and the unpredictable British weather. It features seven key styles, reimagined: the trench, the Harrington, the quilt, the puffer, the parka, the aviator and the duffle.

Shot across London and the British countryside, ‘It’s Always Burberry Weather’ comprises a series of warm and humorous vignettes and portraits. The familiar settings are rooted in Burberry’s history and the outdoors’

This is an example of one of the executions featuring the inimitable Olivia Colman.

I love it because Burberry has gone back to its roots. When a brand is in trouble, it’s always good to reflect on when you were at your height. The slogan, drawn from its archive, ‘It’s Always Burberry Weather’ is fabulous. Short, memorable and true to the brand. It honours its British roots and the vagaries of the British weather.

It’s very product-centric, with each film focusing on a different outdoor garment, showing that Burberry is more than just a distinctive check. The choice of celebrity is inspired. Actors, singers and even footballers. All of whom are quirky, distinctive and supremely gifted. Wonderful role models.

The films themselves are beautifully shot in London and in the British countryside. They’re funny, entertaining and a bit surreal. I particularly love the 10-minute film of Cole Palmer fishing.

Summary

Bravo Burberry. I hope this helps turn your fortunes around. Would I pay £2 490 for a wool cashmere duffel coat? Probably not. I’m not someone who buys luxury clothing brands. But if I was, I’d be proud to wear the brand. Something I wouldn’t have said a few years ago.