Valentine’s Day provides a unique opportunity to study short-term price strategy.
Zagat dining guide reports that spending on a dinner date for two jumps from $70 to approximately $150 on Valentine’s Day. Dinner spending estimates exceed $3.5 billion this year.
The Society of American Florists report flower sales will exceed $200 million this year and 70 percent of the flower purchases will be roses. The roses would cost, on average about $59 in January but increases to an average of $85 during the week prior to Valentines Day.
So, it will cost about a third more to say “I love you” on the day Cupid says we must report-in.
It shouldn’t surprise consumers to pay more for a product or service during peak demand. Airlines do it. Hotels do it. Fitness clubs do it.
We have been conditioned to pay more to buy a product or service associated with a calendar date or peak season.
There are 3 factors to consider when adjusting a retail sales price during a high demand season.
Christmas flower purchases account for 20 percent of annual flower buying. Growers only have 50-70 days to produce the Valentine’s Day supply. If weather problems affect the growing cycle …supply will be diminished and wholesale prices will increase. Supply and demand drives retail prices.
It is hard to fault a retailer for increasing prices during a peak selling season. For some, it may be their best opportunity of the year to drive revenue. It usually isn’t a case of price gouging—or taking advantage of consumers during a crisis. High demand pricing is simply opportunistic.
The tipping point of demand pricing, it seems to me, is hinged upon how a retailer chooses to reward loyal customers. A customer who purchases flowers several times a year may be offended by a higher priced vase of roses on Valentine’s Day.
A marketer’s view of a high demand season should take a more long-term view.
Promotional pricing (charging less than the competition) could impact repeat purchase behavior if the business owner uses the opportunity to build a relationship rather than a sale.
The best time to influence a new customer is during the current transaction.
Show customers love, every day of the year!