It is a commercial tactic that aims to draw the customer’s attention and increase the number of sales. Now, although at first, it might seem like a good tactic for such an objective, it must also be considered that it entails a series of risks. You have to study very thoroughly the convenience of this type of action and think about whether they will be profitable in the long term. Next, we will break down the positive and negative points of these commercial actions.
What are the benefits of discounts and special offers?
Discounts and promotions draw attention to the following points
Increased sales:
This is the most obvious effect that is noticed. More individuals will be eager to buy the product if the price is reduced (directly or by purchasing more at the same price) because they perceive it as a chance to receive the same thing at a cheaper price.
Facilitates knowledge of the product and brand:
Promotions are usually very showy and tend to have the purpose of getting the customer to know us. Especially if it is the launch of a new product, it is a way for the customer to become aware of it and to get to know our brand.
Greater number of clients
The fact of being better known surely ends up making it easier for someone unaware of the existence of the company, thanks to this action, to become aware of its existence. Additionally, lowering the price engages a greater range of potential consumers among those people who were not willing to pay the previous price for the product offered.
What are the drawbacks of discounts and special offers?
There are several disadvantages to carrying out these actions:
Reduces profit margin
Obviously, if the same object is supplied at a cheaper price, the profit margin suffers and is drastically lowered. Any business activity of this nature must be thoroughly investigated to determine how long the firm can afford to operate at a lower margin than typical. As a result, it is critical to restrict the discount or promotion momentarily or quantitatively in order to avoid jeopardizing the company’s existence and solvency.
It does not guarantee client loyalty
New consumers are drawn to our product because they pay less for it, not because they believe it meets their requirements better than the competitors. As a result, customers can depart in the same manner in which they arrived after the offer or discount has ended. To avoid this, the corporation must perform a vital role in the form of transferring values to identify and inform the client throughout promotional periods.
The consumer may experience a lot of rejection after the offer
Since they were “accustomed” to acquiring these goods under very particular and specified pricing limits during the promotion. As a result, if no supplementary loyalty action is carried out after the offer ends, the client may believe that the campaign’s sole objective was to lure them and nothing afterward. As a result, he may not only cease using the goods, but he may also feel rejected by the firm since he is left with the impression that he intended to “cheat” or “use.”
There is a danger of being linked with cheap cost or bad quality
A customer may believe that if a firm offers a promotion, it is because it has not been able to sell the product under the expected circumstances. As a result, there is an issue. As a result, he will opt not to purchase the goods because he is concerned that the quality will fall short of his expectations.
When should you avoid taking advantage of special offers or discounts?
Promotions or discounts of any type are not recommended in the following situations:
Luxury Sector
The luxury market is made up of a highly distinct group of people that are yearning for exclusivity. As a result, the fact that the product is expensive appeals to them since it implies that they will be nearly the only ones who can have it. If the firm lowers the price to reach a bigger audience, it will make a double mistake: on the one hand, it will lose this exclusive audience that is willing to pay more, making it simpler for the product to have a huge margin. Furthermore, it will not reach a significantly bigger audience since the price will remain prohibitively high for the great majority of buyers.
If the firm currently operates with a very low-profit margin
If the company already operates with a very low-profit margin, further decreasing it may jeopardize its future viability. If, in response to such an action, their competitors respond similarly, a price war might ensue, reducing the sector’s margin, leaving only the most competitive and best companies to withstand the pressure.
If the firm already has a specific image in the market as a company that provides excellent value for money, is serious, and obtains a product that meets demand, it makes no sense to begin offering promotions or discounts that may confuse the public. As previously stated, doing so may induce a shift in perception toward a low-quality image, resulting in a major loss in sales in the medium and long run.
The couponing industry has seen a rise in India recently and is becoming increasingly popular among customers.
Certain websites, such as Khojdeal, offer coupons along with cashback on every purchase.
The website also provides users with in-depth reviews of various products through their blog and YouTube channel and offers alerts for sales across various websites. Using their example, you can decide for yourself – is couponing a good idea, or bad?
