First let’s examine why we would discount our products:

  1. To gain new wholesale customers
  2. To entice new consumers to try us
  3. To get better placement in a store, i.e., end-caps, stack displays, cross merchandising
  4. To move overstocks or excess inventory due to a label change
  5. To reactivate inactive accounts
  6. To push sales in a slow period

What really works?

  1. The deeper the discount the more takers you’ll have. If you are an unknown brand you’ll need to go deeper to get anyone to try your product, which means both the retailer and the consumer.
  2. FREE is a powerful word, as in FREE shipping, or buy one, get one free. Normally giving something else FREE is less effective because then the consumer must want both items….however FREE lettuce with a salad dressing purchase, FREE pasta with pasta sauce, or FREE bread with brushetta all make sense.
  3. If you want a large off shelf display, then you must over a discount for the larger quantity that will fill the space….buy 5 cases and get the 6th FREE is effective. Sure many smaller accounts will pass, but you don’t want to fill their back room and not get a reorder for months because they took advantage of this offer. You want them to pass on the savings so there is an incentive for the consumer to try your product.
  4. There is no point in giving 20% off for a one case purchase unless you are acquiring a new account.
  5. Offers with urgency: offer good at the show only. Presell the offer so customers come to the show prepared to buy.
  6. Bracket pricing: have a price list that is good all the time for large quantities, i.e., ½ pallet, pallet, 25 cases, 50 cases, etc.
  7. Promote your best selling products. You want good results at the store level, not a sour taste because the product didn’t sell.
  8. It’s OK to make a deal with a single customer for a special price if they are buying a large quantity or helping you move through excess inventory. Just be sure to probe for all the terms before giving a price so you won’t be surprised by requests for free shipping or ticketing after you’ve given your best price.

What doesn’t work?

  1. A weak offer like 10% off is rarely enough incentive to get the prospect to move, i.e., from one product to another or to go out of their way to purchase (as in buying direct rather than through the convenience of their distributor).
  2. Incentives to sales reps: reps sell what their customers want to buy. Most are too busy to sent extra time showing your product that doesn’t have other incentives behind it, such as trade advertising, demos, direct mail, etc. I once gave my brokers 20% off and told them they could use it however they wanted, part to themselves, part to their customers, or all of it one way or the other. Only one rep in the whole country wrote any business. And this was for a fairly well known and expensive brand.
  3. Specials that aren’t publicized. You’ll need to send your message multiple times to get people to take advantage of it.
  4. Promotions on your slowest sellers. Be prepared to sell these really cheap to get rid of them and then introduce new products with better prospects.

FREE case discounts and what they mean:

  • Buy 1, get one free = 50% off
  • Buy 2, get one free = 33.3% off
  • Buy 3, get one free = 25% off
  • Buy 4, get one free = 20% off
  • Buy 5, get one free = 17% off
  • Buy 10, get one free = 9.1% off