With the advent of bulk purchase marekting websites, are businessess considering the impact of discounting on their brand???
Is discounting a sustainable form of marketing?
Here are a couple interesting blogs on the subject
blog1
blog2
From my perspective there are several reasons to use discounting within your company. The first being to drive additional sales when one is overstocked, or preparing for a new range of products. The second is to leverage the marketing reach of these websites customer lists to increase your brand awareness within a mass population.
The main reason in my opinion that companies should not discount is, unless you are the warehouse, or 1-2-3 dollar store where your business is discounting, and volume is the name of the game, how does discounting reflect on your brand? If you start discounting will it impact on your ability to ever sell a product at full margin again?
The idea behind this post is for those companies out there looking at using discounting as part of their strastegy consider the real impact on their bottom line, and their brand positioning. The recession has been difficult for many organisations, but there are other ways to make your business work without necesarily resorting to discounting. And as I have stated above there are also good reason why this sort of marketing can work!
3 comments:
I think there is a place for it and it can be used as quite an effective tool when used at the right time. For starters, you are unlikely to see premium brands utilise an avenue like this (I agree, it would erode perceived value and has the potential to really damage a good brand), but take a smaller business like a owner operated resort for instance.
You have a number of rooms that are vacant and thus losing money, you offer a bulk discount and anyone who takes it means money in the door. Plus, if people like they will come back, tell their friends etc so they can resume full price selling at those stages (people know the discount sites are a one-off). This is really no different to the advertising on the back of supermarket receipts.
Or, to use a product case, say a winery is looking to move stock. For starters, it has a shelf life, so moving it quickly may be a necessity and any money paid for it reduces that businesses wastage costs. Secondly, it gets people drinking that brand so they will recognise it next time they go to buy wine. Thirdly (and this applies to all product sales), if a business needs cash flow and it is possible through one these sites to get a quick cash injection through a mass sell off, then assuming it is sold above cost, it could be a way to stay afloat while you work on your total marketing mix.
All in all, I think for a lot of small to medium sized business, it would be quite an effective way to inject some cash into the business, get your name out there, and get people talking. A lot of the stuff that comes through on these sites is stuff you would never have heard of or bought otherwise, so if you do on this occasion then it's a win on a number of fronts for the business.
My 2c anyway...
Thanks for that Alexander, and I agree with your examples.
I was speaking to a friend earlier this week who's hair dresser is using one of the mentioned deal websites, she is so busy she had to interrupt y friends hair cut to answer the phone. Not only this but my friend was paying $250+ NZD for the haircut.
I think the last straw for my friend was the hairdresser did not allow existing customers to buy the deal, this has left my friend with a pretty bad customer experience.
There are a few things that can be learned from this. 1 this marketing method works. 2 you need to be capable of continuing to service your existing customers through the influx of new business.
Sad to say but in this case I was able to pass my friend a referral to a new hairdresser, so although this marketing effort was a success, she lost a long term loyal customer...
I’m glad to find so many useful and informative data on your website.
spreets
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