The policy of applying discounts to products is one of the strategies that can increase the value of sales and attract customers and help to gain loyal customer confidence and improve the reputation of the brand among consumers, but this requires setting the goal to be achieved so that these discounts do not harm business.
Andrea Velasco said in a report published by the Spanish newspaper Almondo that the American Marketing Association confirmed that pricing strategies based on reducing the prices of consumer products are an essential tool for increasing sales and replenishing product inventory, as well as increasing the value of the so-called return on investment.
The Association warns of unexplored and exaggerated cuts that could harm the project for several factors, the most prominent of which is the failure to reach the expected sales percentage, while these cuts give a negative perception about the quality of the brand that itself underestimates the products.
| The cuts should be according to a deliberate strategy and achieve the goals set for them (Getty Images) |
The writer added that defining the main goal of any reduction is the pillar upon which the formulation of any of the commercial strategies is built, and she stressed the necessity of segmenting the goal with precision that helps achieve the goals behind the cuts.
1- Acquire new customers and gain the trust of other customers
The writer indicated that the announcement of lowering product prices is a good way to attract potential consumers, and said that achieving this goal requires a good marketing strategy based on providing this reduction on certain products for a limited period.
This method is very useful in the business world because it helps to know the return on investment achieved by the campaign, and was able to know the number of new customers who bought other products from the store.
The author warned that the goal of discounts lies in gaining customer loyalty to the brand, and that some companies are concerned with discounts, sometimes old or stationary customers who are used to acquiring their products.
Providing free shipping to deliver products to customers is a good option for increasing sales, and many marketing studies reveal that high shipping costs are the main reason why online purchases are sometimes not verified.
2- Discard the old stock
The writer mentioned that some companies face a real problem related to a lack of space, which requires disposal of the old stock in order to be replaced by the new stock.
The process of reducing prices on products that filled stores from previous seasons is one of the methods most used by companies, as the company does not aim - in this case - to achieve profits as much as it seeks to obtain space in the store.
3- Promote cross selling
The writer mentioned that adding complementary products to the main product is a common practice in direct marketing, and that it is called a package of discounts, where the consumer enjoys discounts if he purchases a group of products together.
The benefits of this method not only increase the number of products sold, but are also considered an effective formula to end the stock that was not very popular, and stores use the period of discounts to promote all of their products, given that customers only care about products that are reduced in price.
| Reductions in high percentages should not give the impression that the product is ridiculous or poor (Communication Websites) |
4- Collecting cash to buy new stock
The author stated that the company sometimes cared about having to have a cash flow to be able to purchase a new stock of products, which makes prepaid downloads the best option for companies that offer periodic or seasonal products, because it allows them to obtain cash instantly.
It is possible that a newspaper or an anti-virus service can encourage prepaid and promise to reduce prices if the customer subscribes annually.
5- Improve brand reputation
The writer explained that the company's activated cuts for certain groups of people positively affect the company's social responsibility, which enhances its reputation.
Discounts for people over 65, for children under five, and for individuals with difficult economic conditions are the best social advertising for a brand, as the company offers itself in this way as an organization that combines social commitment and business.