I'm not big on lowering prices & giving stuff away at a discount just to generate some new traffic.

Yes, discounting can work short-term but, in the long-term, it can cost you MONEY! Many business segments around the world use this concept, including the Hospitality Industry. And, if often creates what I call “a mooch market mentality.”

Let me give you a classic example: When the economy went haywire a couple of years ago and interest rates skyrocketed, the automobile industry countered by offering discounted interest rates. They also initiated a practice of offering "rebates" on sales of most models.

All of these actions were taken to stimulate a market that had just about all but dried up. The ideas worked and new car sales rebounded significantly.

Then an interesting thing happened. When the incentives expired, car sales fizzled again. When the incentives-were restored, sales again rebounded. Too late, the industry discovered that it had "conditioned" the marketplace to react only when given discount or "reward" stimulation.

This same scenario also applies to the Hospitality Industry. In many markets, the population has been conditioned to only respond to an operator when a discount incentive is offered.

The point is that once you've conditioned the market to respond to you on a night when a11 drinks are a quarter or ladies drink free or whatever, it's a very tough job to convince that same market that, on another night, that your prices are a bargain at the "normal" level.

The real problem is that once you have created a “mooch market mentality,” it becomes increasingly more difficult to reverse the process. Something all of us should take a serious look at.

Source: The 4-Part Manager's Survival Guide, "Bar/Nightclub Management & Marketing" , a   powerful tool for creating traffic & increasing sales using proven marketing, promotions & improved operations techniques.

About the author: Ray Ford is a food & beverage consultant. FORD Management Services specializes in business plans, new concepts & business turnarounds. The company also develops Web sites & online services. If you have any questions on a project that you're currently working on, or  would like some input, drop us an email: using this convenient form.

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