A proper pricing strategy is very important for retailers, especially when it comes to promotions.
The majority of the price cut is covered by the producer of the promoted product, while some comes directly from the retailer’s margin. In addition, to maximize the effects, it is worth promoting important categories systematically. This is what promotional calendars are used for - to better manage promotion time and prices. When it comes to discount stores, due to the limited assortment, the case seems much simpler. But it turns out that this is not always the case, as you can see in the example of Lidl.
Two promotions for two almost identical products from the same category took place at the same time: washing capsules from Persil for 22.99 and Ariel for 24.99. These are the only brand products in this category at Lidl, which means that from the shopper’s side, the whole category has a reduced price. Studies show that buyers are very SMART, focusing on the relationship between quality and price, so if “their shop” offers a promotion for 2 brand products at the same time, they often choose good quality at a lower price. The effect can be seen in 2 places in the left photo, where the customer put down the more expensive Ariel and took the cheaper Persil, and at the cash register, which automatically lost almost 10% of trade on this 1 product.
