Retailer and Manufacturer Views of Discounting
Discounts have been quoted as “the fuel that drives the retail engine”. The discount concept has become an integrated part of the world’s shopping life and is no longer seen as unusual.
Discount sales do increase sales volumes greatly, but it also makes deep sales troughs in between sales. Consumers have also become jaded by the continual bombardment of sales going on week after week and are often distrustful of shops that overuse the sale as a selling tool. Therefore, shops should be careful when planning their discount sales.
Studies have shown that consumers make purchases based on price rather than show brand loyalty, whereas repeat buying or new customers should be encouraged. Discount sales that are not planned strategically can lead to price wars with competitors, which is bad for the image of that particular business or brand. With many customers, a brand name is everything.
Small business owners need to be aware that discounts can land them in trouble if they do not adhere to a uniform set of discount rules. Word of mouth is a powerful tool that has been used throughout the ages and customers talk. If they feel they are not getting the same deal as another customer, this will lead to clients reacting negatively.
This can be disastrous for a small business owner if he is unable to control the way he offers different discount deals to different customers. Small business owners who know their key customers well are also better able to offer discounts that bring benefits to their companies.
