Deciding when to discount a premium brand-or not

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McCoy and Associates offers a series of hazardous waste and clean air training seminars around the country for engineers in the environmental, health and safety departments of Fortune 500 companies. In teaching attendees about how to read and understand the latest government regulations in their field, and counseling them on how to remain compliant, McCoy provides premium service; for a hefty attendance fee of $1,850, attendees receive five days of instruction plus free follow-up telephone consultation.

The Golden, Colo.-based company also offers that seminar industry standard, the multiperson discount, for additional attendees from the same company.

"We're the smart guys with the warm, friendly face," said Robyn Weber, McCoy's marketing officer.

But now McCoy is facing competition from another firm that puts on many more seminars in the same field, in many more locations and for much less-about $800 for just three days of training, plus a $200 annual subscription for telephone consultation.

In response, McCoy is questioning its pricing model: Is it too high or too low? What can it do to maintain margins and customer loyalty in the face of new competition and rising costs?

But the most crucial question is this one: Should it eliminate its multiperson discount? McCoy executives were worried that the discount not only costs money but conveys a declasse message.

"I'm not a huge fan of discounting; I think customers can become addicted to it," said Weber. "And we don't want to erode our premium brand. But our best customers are investing a significant amount of money and should get a break in some way."

Significantly, McCoy has only about 50 companies-representing perhaps 2% of its total attendees-that attend in volume. Some of them send as many as 40 attendees at a time to McCoy seminars. But the company's multiperson discount has been available to any and all comers.

After considering all its options, McCoy is moving to de-emphasize the multiperson discount and stick with its full pricing, but also offer free seminar passes for additional attendees to its very best customers. The plan eliminates the scattershot discount reward to all, and instead lavishes it more directly (in the form of extra-attendee passes), exclusively on top clients.

McCoy also plans to provide such added benefits as lunches and custom-logoed shirts to this select group.

"We have fiercely loyal customers," Weber said. "But we need to simplify our pricing to take care of them. We want people to become loyal to the company, not to the bargain."

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