The festive period is rife with promotions and sales. In the lead-up, we see brands compete during Black Friday and Cyber Monday. While in the immediate aftermath, attention turns to the hectic Boxing Day sales. While it can be tempting for brands to join in the sales madness, is there a case against discounts? This article will explore the disadvantages of offering discounts and highlight which businesses shouldn’t become a discount brand.
Disadvantages of Discounts
Loss of sales revenue: If your brand is regularly offering discounts and promotions, it is only normal for customers to hold back on purchasing until they can secure their purchase at a lower price. If a customer waits for a sales period to buy an item that they would have otherwise purchased at full price, the brand has lost out on revenue which ultimately reduces profits.
Cheapens the brand: Cheaper products are associated with poorer quality, so you must accept that reducing the price will also reduce customers’ perception of the product. Cheapening or diluting your brand means you are running the risk of alienating those who are looking for quality instead of value.
Promotions are less powerful: Sales periods like Cyber Monday are a great time to pick up items at a cheaper price. But if your brand is regularly offering discounts anyway, don’t expect customers to flock to you. The most powerful promotions come from brands that don’t often give customers the opportunity to pick up a discounted product.
What Type of Brands Shouldn’t Use Discounts?
Luxury Brands
Luxury brands are reliant on exclusivity and scarcity. But to create this, they must charge a high price. It’s common to see luxury fashion houses like Louis Vuitton and Prada charging extremely high prices that make their products inaccessible to most people.
Brands like these rarely offer discounts, if ever. If they were to take part in periods such as Black Friday and Cyber Monday, their products would instantly become more accessible which would impact the brand’s luxurious perception.
High Demand Brands
Brands that are in high demand also don’t need to rely on discounts. These are often the leaders in their field, think of brands such as Apple and Dyson. These types of companies can often rely on brand alone to sell products, instead of utilising discounts and promotions.
If customers purchase from these brands regardless of price, a sale would only result in a loss of revenue.
Sustainable Brands
The concept of overconsumption has become hotly discussed recently. Fast fashion brands in particular have come under scrutiny for driving overconsumption through discounted garments and constantly changing product lines.
If a brand claims to be sustainable, encouraging consumers to make a purchase by lowering the price could reflect poorly on the brand’s sustainability efforts. Sustainable brands should instead use other methods such as creative storytelling around sustainability.
Final Thoughts
A 2023 survey revealed that one in seven people require debt advice. As a result, this reduction in spending power has led many brands to lower prices in an attempt to keep driving sales. For brands that are competing on quality or sustainability, while this may be tempting and even beneficial in the short term, it may harm your brand’s reputation in the long run. Before committing to discounts and promotions, brands that do not compete on price should explore other ways to drive sales. This could include finding new ways to tell the story of a brand, releasing limited edition product lines to generate a spike in demand and making efforts to ensure your brand stands the test of time.
