Should You Use Discounts To Boost Product Sales?
If you ask me, I would never want to price myself low – no matter what reasons you might bring to the table. Playing the pricing game is more of an art than science and not everyone gets it right first time off. So, should you use discounts to boost your product sales? Use it occasionally; but don’t make it a habit. Here are reasons why:
- Your customers will come to expect it all the time: I am sure you’d heard of the Pavlov’s Dog experiment — it consists of feeding a dog each day, at the same of the day, and ringing a bell when that happens to ensure that the dog associates the ringing of the bell to feeding time. One fine day, no food is given to the dog but the bell is rung. Guess what happens? The dog salivates; it expects to be fed. Customers are just like that — once you do something, they would expect it again and again ( now you know how brands are formed?).
- It erodes profit margins: It’s obvious, isn’t it? Any sort of discount will wash your already depleting profit margins. One way to escape this is to price yourself way higher than competition and comfortably into profitability and then offer discounts such that you don’t lose much. However, to be able to price high, you will have more work to do on your business than you can care to admit — you got to have a USP in place, enough instances of being unique and desirable, etc.
- Price is just one thing; there’s more to buying: There is price and then there is a brand. There is a lot of Interplay here, just to be sure. However, price is the last thing on a consumers mind, when you get point 2 straight to the core of your product or service offering. You see, a lot goes into my purchase decisions and price is just a part of it — the intensity of my need, the attractiveness and timing of the offer, the brand, the image, the colours, the logo, the word out on the street and whatever my wife thinks of it.
Giving away discounts is a sure way to add to the attractiveness of the offer, but it should not be abused. You must ensure that your customers don’t come to expect discounts at all times. You can’t afford to be a Walmart, because you are not Walmart. Think of other ways to entice customers and not rely on just one method like discounting.
What do you think about discounts? Do you agree that it should not be used at all times?
