Avoiding the ‘death spiral’: Why commanding a price premium is the best strategy for profitable growth

Nigel Hollis

This article argues that over-reliance on price promotions kills profit and brands, and suggests some ways in which brands can build a premium price positioning.

Avoiding the 'death spiral': Why commanding a price premium is the best strategy for profitable growth

Nigel HollisMillward Brown

While dropping prices is likely to increase sales volumes in the short-term, the long-term consequences of training people to expect cheaper prices can send brands into a death spiral.

Over-reliance on price promotions hits margins hard, and it becomes difficult to find and justify the money to invest in advertising and innovation – both of which are essential for building a strong brand that customers will stay loyal to for years to come.

And the vicious cycle continues:...

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