An interesting case in point for garden centres is the humble winter heather. Over the last number of years garden centres have promoted a mid-sized heather. Retailing perhaps at €3.99 and then on offer at 3 for €10. What could work better is a smaller sized plant that appears to be – and in reality is - better value. Consider plants at €2.50 each and 10 for €20. Which could be advertised to better reaction? Which is the better long-term deal for the customer? Which is making you more cash profit?
This example can be applied to many lines. Keep an eye on your cash profit and not just your margin. Here is another example from the garden centre sector – the Camellia. Many sell a smallish plant that sells for €11.99 or €12.99, but what if you took the cash profit that you would make on the smaller size and applied it to the next size up? You would have a Camellia for €14.99 that would be perhaps twice the plant of the smaller one. The perceived value to the customer would be greater and you are make the same cash profit per plant.
Could you even apply the same rational to a set of furniture? This idea might seem to contradict the heather example above but they are two different offers for two different styles of plants, and both could work. Also both work on the principle of maximising cash profit per sale while giving value to the customer.
