Does a price-slashing promotion really work?

A friend in the ski business told me that the volume of business a resort does during the President’s holiday week could make or break the business for the season. Resorts have just a few windows of opportunity to do the bulk of their business, and most of them rely on holidays. So when I saw that a major resort was offering a substantial discount during the holiday week I had to wonder, could they really afford to do this or were they simply that desperate for some business? The deal was a $50 lift ticket which reflected about a 40 percent discount. The catch was you had to buy a two-day lift ticket for $100. So the resort was gaining a skier for two days, but also gaining lodging bookings for at least two nights, food purchases in the base lodge and restaurants, and probably a few other sundry items. Now, of course, one could argue that this is found money. But how does it weigh in really? Is the resort capturing new skiers that might not have traveled to ski during the busy holiday weekend? Or is it cutting into its existing pool of reservations, people who were planning on coming to ski but simply hadn’t made reservations yet? And now they’re doing so at this deeply discounted rate. Whenever you decide to offer a promotion that involves offering discounts on a popular product, you must weigh the pros and cons. Work the numbers. If you can project that you have something to gain, either financially or perhaps customer loyalty, then the promotion just may be worth it. But if you’re taking a gamble and perhaps panicking a bit simply to get some cash through your door during what should be your busiest time of year, you might be doing your bottom line more harm than good. It’s easy to feel some panic during these economic times. But don’t stray from your core values with knee-jerk reactions to your business’ volume. It may satisfy a short-term need, but hurt you in the long run.

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