Comments on: Discounting Prices Discounts Your Brand

By: newegg

newegg — Wed, 04 Nov 2009 02:36:01 +0000

Good discussions. But things like commodities will fluctuate in price depending on supply and demand, stock market activity, weather, etc. so gas prices and food products change regularly.

By: Adobe

Adobe — Sat, 29 Aug 2009 09:51:14 +0000

I think as a manufacturer and retailer of a high quality item that is made from scratch per order, I realized this after having promotions/discounts. I noticed some loyal customers that were spending over $200 per order, would come back after a month the promotion had ended and ask for the same discount!

By: Complete Savings

Complete Savings — Wed, 28 Jan 2009 08:09:09 +0000

Hi,
Thats true. Discounts in a long term doesnt serve the purpose. They hit your bottomline heavily.
Besides, consumers tend to feel that overly discounted products lack in quality.

By: Nina

Nina — Sat, 17 Jan 2009 21:20:08 +0000

Thank you for this great article. This is so true. As a manufacturer and retailer of a high quality item that is made from scratch per order, I realized this after having promotions/discounts. I noticed some loyal customers that were spending over $200 per order, would come back after a month the promotion had ended and ask for the same discount! And guess what? The total of their new order was less than their previous orders!
Some even said “I’ll get 2 items ‘if’ I get a discount…” Almost like a threat or a warning! Learned my lesson. Don’t discount quality items that are your main items. Discounting items that are seasonal and you want to get rid of inventory might be Ok, but your main product should not be discounted as it really changes the way your loyal customers look at your brand.

By: Paul (from Idea Sandbox)

Paul (from Idea Sandbox) — Fri, 24 Oct 2008 08:35:32 +0000

It is possible, Marvin that you aren’t charging enough.
Folks may wonder what quality they could be getting if they get all of that for only $50?!
Another challenge may simply be that people just don’t want/need a “lunch and learn” to get their cabinets done.
Ask a few of your former clients… and ask future clients what they really need.
Is it that they want to cut costs by building it with you? Do they lack the imagination to see how it would look finished (and worth the investment)?
Just stuff to think about. Best to you Marvin!

By: Marvin W. Towler

Marvin W. Towler — Tue, 23 Sep 2008 18:23:27 +0000

I’m a kitchen designer that advertized a 2-hour Design-a-Kitchen Seminar. It included three projects workbooks, lunch and design solutions. I charged $50.00.
After no-one signed up I started second guessing whether my time, wookbooks and advice should be free to get people in the door.
After seeing these comments I don’t feel $50.00 is too much to ask for. I’m selling custom cabinetry that if you can afford to buy you can afford $50.00.

By: Mary Jo Finn

Mary Jo Finn — Sun, 31 Aug 2008 17:44:24 +0000

From my past experiences, I have found that everything will sell if it’s priced right. I think most shopper’s these days are savy enough to know the value and price before they make their selections.

By: Paul Williams

Paul Williams — Tue, 19 Aug 2008 06:39:49 +0000

My advice as a marketer is to put yourself in the shoes of the potential buyer.
Does the price cut affect the way you feel about the product and/or brand?
In our discussion here we’re finding legitimate business reasons for discounting… are there are loads of legitimate reasons…
However, regardless of sales justification, does it diminish the perceived value?
If YES, then discounting shouldn’t be your approach. Find an alternate way to get rid of the product than putting it on sale in your location.

By: Elaine Fogel

Elaine Fogel — Tue, 19 Aug 2008 02:13:53 +0000

Excellent discussion. I think there are many good points made here. However, I also think it’s hard to make blanket deductions about a lot in marketing (with few exceptions). Doesn’t it always depend on what the product or service is and who the target market is?
Things like commodities will fluctuate in price depending on supply and demand, stock market activity, weather, etc. so gas prices and food products change regularly.
New technology makes older models less attractive and eventually obsolete, so sales are common when new products are introduced.
Then there are loss leaders, reduced to bring consumers into a business where regularly priced goods are often purchased.
I guess what I’m saying is that there are different circumstances for lowering prices, and not all of them will necessarily affect the brands themselves.

By: Abhi Vyas

Abhi Vyas — Mon, 18 Aug 2008 20:54:15 +0000

Great article Paul. I think the effect of a price cut will be determined by the elasticity of the product in question. There are several economic models which can calculate the impact of price cuts on their demand. No doubt, price cuts do hurt brand image in the long run.
Some brands never require price cuts or promotion. We will never find GE offering promotions on its turbines; — Buy 1 turbine get 1 free.
I think it all depends on the positioning of your brand and consumer’s expectations.

By: Paul Williams

Paul Williams — Mon, 18 Aug 2008 09:21:11 +0000

Imagine – I agree with you. Cutting prices doesn’t have to be only on a big ticket item.
Discounting the price of a quick oil change from $19.99 to $15.99 or the price of a movie rental from $3.99 to $2.99 has the same effect. You’ve now sent the message that the oil change is actually only worth 16-bucks or the movie rental, 3-bucks.

By: Paul Williams

Paul Williams — Mon, 18 Aug 2008 09:18:47 +0000

Paul – I agree there are times when a retailer needs to clear out last season’s items to make room for this season.
However, even in this example, you see a cycle where customers will often hold off on buying the clothing item until it goes on sale. If she *really* loves the dress she may by it now while she can (and it is in her size). But if she simply likes it… she may wait until the sale and hope her size is there at the lower price.

By: Imagine

Imagine — Sun, 17 Aug 2008 05:16:31 +0000

Not everyone can price at a premium — there are some players that have to price in accordance with lower income brackets and slower economical times.

By: Jay Ehret

Jay Ehret — Sat, 16 Aug 2008 21:00:02 +0000

Excellent advice, Paul. As a general rule most businesses do not charge enough money for their product/service. Particularly because they pay so much attention to the price portion of the value equation. Paying less attention to price and more attention to factors such as the customer experience allow businesses raise perceived value and thus command a higher price.

By: Paul Barsch

Paul Barsch — Fri, 15 Aug 2008 14:45:44 +0000

Paul, thanks for this post. I’ll agree with you –to a degree. In some instances, discounting makes sense. Suppose for example a retailer needs to move seasonal merchandise, or needs to move one of a kind items. Also, with the sophisticated analytical applications that many retailers are using these days, they can predict just the right “mix” of products, and also how much to discount to get the products moving. Analytics takes much of the guesswork out of pricing.

By: Salam Kitmitto

Salam Kitmitto — Fri, 15 Aug 2008 14:10:19 +0000

Today’s savvy customers are very cynical towards “sales.” To compound matters, the internet makes it extremely easy for customers to gather as much information (including price) on a product as possible. When a company decides to offer a “sale,” they must be certain that their price is in-fact lower than the prices offered by the countless other online retailers.
To give you a personal example, just recently I was looking to purchase 2 books. I found them on “sale” at a well known online retailers website. I then checked Amazon’s website and found their price significantly lower than the previous store’s. In-fact, I ended up buying the 2 books plus a third one from Amazon for a total price that was only $1 more than the price of the 2 books at the other store. Needless to say, it is unlikely that I will ever patronize that store again (I had been a loyal customer of theirs for several years). The moral of the story is that “sales” can end up hurting a company more than helping.

By: Malcolm Wicks

Malcolm Wicks — Fri, 15 Aug 2008 13:34:18 +0000

Paul,
I agree with your comments but actually its even worse to cut prices than you stated. I’m carrying out a survey to determine what marketing activities work and which ones don’t. http://tinyurl.com/6fnr6d
So far over two thirds of respondent say that price cuts don’t actually work. There are a lot of more effective tools for getting new business that don’t have all the disadvantages mentioned in your article.