You can describe discounts as marketing tools that help drawing customers to your business by allowing them money savings on buying certain products or multiple products and form an important strategy for online merchandising of goods and marketers often use them for introducing new items and retaining old customers, thus enhancing revenue.
Liquidating Surplus Stocks
They use discounts to push sales of chosen products through customers who fulfill certain laid down conditions. For instance, you could have a couple of items occupying your shelves, as they did not sell to expectations. You may offer special reduced prices to sell those items. For example, consider you huge pile of t-shirts did not sell during December. You may get rid of this surplus stock by offering substantial reductions for a limited period to a specific class of customers.
• Plain discount: You could offer the chosen product at reduced prices as a percentage of the listed price or straightway in terms of dollars. Here is an example; buy one shirt and get 25% discount on the start-up price.
• Least Buying discount: You may choose to offer discount to clients who buy a minimum specified quantity. An example; on purchasing two shirts get 20% off on both the shirts.
• Buy One Give One Free: Give a gift on buying a least quantity. For example, on buying one shirt, get the second one free.
• Paired Discount: Offer a discount on a particular product on buying another specified product. If you buy one shirt, pay 10 dollars less on jeans.
• Paired Set Discount. Propose a discount on one item for buying specified quantities of another product. For instance, buy two pants and get 30% discount on a pair of jeans.
• Order discount: Give a reduction in prices or offer shipping without charge on the total value of the order on buying goods worth a minimum specified amount. For example, on buying goods worth $100, get a 10 percent discount on total billing.
Look for a pricing policy that helps meeting sales objectives while enhancing your reputation, providing the most profit, and creating a good demand for the goods. This policy of offering discounts certainly helps attracting clients but for short terms only. If used on a long-term basis, this policy influences brand loyalty and market positioning negatively.
Discounted prices enable businesses to sell large volumes of low-priced items. On choosing to follow this strategy, it is imperative to cut prices and stay competitive. Larger stores can demand quantity discounts from manufacturers and effectively design their pricing strategy.
Use discount on list prices carefully and infrequently. It helps to offer occasional reductions to regular clients. If offered too often,they may set a spiral of low prices, making it rather difficult for you to sell goods at normal prices.
Pros and Cons of Discount Pricing
Discounts offer an excellent opportunity to keep customer loyalty, especially when you consider the rewards to employees, repeat and volume customers. This discount policy, when applied on a short-term basis allows the company to sell more units during this period, accounting for a transitory revenue boost and critical inventory reduction.
Before you decide upon your discount pricing strategy, you would do well to consider product positioning as well. Sometimes, where the product does not have an accredited brand name, consumers may read a low price in perceived consonance with lower quality. Such customers may decide to go in for a branded quality product over price.