Offering discounts can be a double-edged sword for brands.
While discounts might seem like a lucrative strategy to boost sales, they don’t always sit well with every product category or target audience. The key is to understand the product’s perceived value.
What is perceived value? It’s essentially the worth a consumer assigns to a product based on their perception. It’s fragile and can easily be swayed by discounts, especially when a consumer isn’t too keen on making a purchase initially.
For instance, research on discounted jeans found that buyers valued them more when the discount was steeper. This suggests that for everyday items, larger discounts can boost their appeal.
However, luxury items dance to a different beat. When high-end products receive a markdown, it often backfires. They might be perceived as being outdated or not as sought after, thus lowering their allure. Here, the original price tag acts as a yardstick for quality. A lowered price might then hint at compromised quality or reduced trendiness.
Supporting this, another investigation revealed that luxury brands should be wary of frequent or hefty discounts, as it might erode the perceived worth of their offerings.
The lesson? Not every product merits a discount, and certainly not a hefty one. It’s vital to gauge customer intent when devising discounting strategies. Avoid rolling out deals recklessly, as it might dent the perceived value of your brand and products.
Check the post “The impact of discounting on brand equity”
