How to Turn Markdowns into Marketing

Q: Mr. Pruitt, I have read your column in MR and have a question for you. You have discussed the idea of turning a markdown into a marketing dollar. Could you elaborate on this idea and also explain the timing of this action?

A: Sure, this is a good question, and I’m not surprised you asked because the concept is a little odd. First, a markdown is a markdown no matter when you take it. The difference is the effect. If a markdown actually creates demand (lifts the sales trend) I consider this to be a marketing effect. If the markdown just reduces prices, and sales don’t lift as a result, then this is not an effective marketing strategy.

As for the timing, the conversion from markdown to marketing dollar usually happens in the face of demand (pre-peak of season). Markdowns are not effective as marketing tools after the peak of the season.