How helpful is a discount?
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
If there is a discount on a car that I own, does it not indirectly mean mine is overpriced?
Sweeping as it may sound but an advert that splashes discount to sell a product pretty much belittles the features of a commodity; often, it shrouds the product features totally. Do discounts actually enjoy importance enough to blur the company’s vision? Should the practice be ended or limited to rare and traditional occasions? Does it assist customers in the long run?
For example, if there is a discount on a car that I own, does it not indirectly mean mine is overpriced? The brand with an advert makes a strong projection that I have pitfall margins and I am ready to part with some to draw your attention and spin bigger numbers almost immediately.
The hypothesis that the customer gets strayed by the discount pitch through any advert is flawed. Countless brands pour discounts and then the customer has to choose between looks, features, brands, maintenance, durability, shelf life, electronics, entertainment and convenience. Many-a-time the consumer attempts to choose the best combination. Does it help in improving industry numbers? People may refrain from the answer but the current scenario speaks volumes.
Discounts in the long run erode customer’s asset value. The customer is never confident of getting the best deal or the best price. Consequently, the joy of buying takes a hit. The buyer, even after purchase, continues to wonder did he finally go for the best or was he misled yet again in the plethora of discount opportunities. He perennially wonders if it could have been better.
Just imagine a customer buys a newly-launched car and after sometime there is a huge discount. This totally crashes his car’s resale amount! The question is two-fold: Why should a customer pay the price if the market is an experimental temperament? Why should customer continue to keep his faith in the brand?
The flip side to the same story is that even brands are harried due mad race of numbers laced with rampant discounting prices. The amount spent to check these practice is exorbitant.If the product price is fixed with an aim to limit big discounts, it will culminate in greater benefits for the consumer. Correct pre-tax would inadvertently work on VAT, excise and other taxes. And, it would ultimately place consumer at vantage point. Fixing prices would mean same cost with added features in the product. This would allow brands to sell customers an experience instead of a bewitched tale of lure.