The Pros and Cons of Lower Cheaper Discounts

One of the most common forms of 'marketing' is what I call the L.C.D.

It translates into 3 universally embraced words:

Lower Cheaper Discounts (or Lowest Common Denominator, depending on how you see it).

In the hypercompetitive world of consumer marketing, offers, special deals, sales, one-for-ones, buy-one-get-one-free, season-ending-soons, and other price-related promotions have always been preferred. If you look carefully at your newspaper advertisements, the majority of them would come with a slash-and-dash deal.

Want to move old stock? Dump them in the bargain bin with a 50% off!

Tickets not moving fast enough? Roll out the credit card and partner promotions.

Restaurant looking cold and empty? Offer a set lunch, free beer, free dessert, one-eats-free or all of the above!

Wondering why there is "nobody, nobody but you"? Give them the ultimate rock-your-socks deal: FREE (in bold and caps) entry.

While the LCD does work momentarily in moving your customers and their wallets, it hardly strikes me as a sustainable endeavour. Repeated and regular discounts cultivate a serial "waiting" behaviour amongst consumers.

This is also known as the "I know that you're only going to sell me that Prada bag at 30% off during the Great Singapore Sale so I wait lor." symptom.

Although the cash registers may be ringing, profits end up becoming razor thin (if any). You could increasingly attract a less profitable and more price-conscious crowd, while setting the alarm bells ringing in the heads of high-value and less price discerning customers ("I'm not squeezing in there with those 'aunties'").

Of course, while they're in the shop, you could entice them to buy other regular priced items (ie your offers act as loss leaders), but hardcore discount buyers tend to be notoriously difficult to waylay.

Having said that, an occasional offer or a delicious deal is useful in grabbing much needed attention in a sea of ads. It is fiendishly difficult to forecast demand, and generating cash flow could be much better than letting your stock sit idle while occupying expensive storage space.

However, be mindful not to overdo it. Rolling down the price/value hill is easy, but once you do that, climbing back up again would be a strenuous task. Once consumers label your brand as CHEAP, it will be difficult to convince them otherwise in future.

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