By Avik Chattopadhyay
There is an ‘End of Season’ offer from Levi’s that you get two pieces of apparel for every two pieces you buy. People in WhatsApp groups I am part of are already sharing this offer exclaiming it’s a terrific deal. At the same time, many in the same groups are writing off the Maruti Suzuki Jimny as it is going on Rs 2 lakh off the sticker price. One is great “value” while the other is simply a “discount”.
What really distinguishes a consumer offer as a value offer from one that is scoffed at as a desperate one? I think there is a very thin line dividing them.
Amazon Prime’s annual membership fee was terrific value.
Netflix slashing its monthly single device fee to Rs199 was a desperate discount.
Levi’s offering ‘Buy 2, Get 2’ as an ‘End of Season’ is terrific value.
Cantabil offering the same throughout the year is a desperate discount.
Having spent my life in brand management and marketing, I have always grappled with finding the balance between an offer and a discount…a strategic move versus a desperate measure. Having faced failure from close quarters, this marketing puzzle continues to put my fraternity in a tizzy, from soaps to SUVs.
What must be going on in the mind of the brand manager of the Jimny?
What must have always eaten into the minds of the people who run Cantabil?
What makes Indian brands join the ‘Black Friday; bandwagon while we have our own Diwali / Puja season?
Timing is critical
When you plan your special offers sets the tone of the promotion’s correlation with the brand’s positioning. If it coincides with the traditional periods of promotional sales, you are not a sore thumb. In fact, people expect the most popular brands to offer their best on these special occasions the prospective customers save up for.
If it is too soon after your launch in a market, be ready for the jibes and barbs. Even if you realise you need to make a strategic pricing recalibration, doing it soon after your launch is not very clever. If you need to clear immobile inventory, convert it into a special edition or a limited edition, add some features or freebies and then push it out. Luxury brands are masters at this game, from fancy coffee machines to cars. If you cannot think up such a fix, then just bear the pain for some more time and wait for the right time.
Most apparel brands plan their offers during the bi-annual ‘End of Season’ periods. I know of uber HNIs waiting for these periods to stock up on their Hugo Boss wardrobes.
Context is key
You may also choose your ‘time’, based on brand milestones like anniversaries, founder’s day, sales numbers and so on. That justifies the reason to offer a special price as part of an overall celebration. Volkswagen in India started the ritual of the ‘Volksfest’ in October as a celebration of the brand including special offers. An India-specific initiative, it coincides with the traditional festive season and seemingly does quite well for the brand.
For this to actually work for the brand, it has to be aspirational enough to expect customers to wait for such occasions that stand apart from the traditional periods. ‘Cyber Monday’ was created as an extension of the Black Friday week encouraging people to shop online only as recent as 2005. Amazon has created a brand out of ‘Great India Shopping Festival’ and a significant part of digitally-abled India wait for this half yearly promotion.
Market leaders like Maruti Suzuki could create its own promotion festival coinciding with its foundation day. That way, customers get to appreciate the brand better as it is associated with a key milestone, helping build a bond more emotional than merely transactional.
Discounts need not be desperation
There are brands that have developed discounting as a virtue than a handicap. Amazon gives you not only the range but also deep discounts. Reliance Retail does the same through Trends and Digital. Vishal Megamart caters to a certain economic stratum with the same benefit proposition.
For other brands, discounting need not be made to look as a desperate measure. Even if it is a price recalibration or correction, the brand has to have the candour to admit so and pass on the same benefits to all previous customers of the same product. That way, nobody feels cheated. In fact, you convert them into brand advocates through your demonstrated ‘transparency’.
As an example, we have always seen automakers increase prices due to rising input costs and a plethora of reasons cited by them to justify the act. There have been occasions when input prices have come down but not a single automaker has even brought its prices down, even if symbolic.
In hindsight, I do not think there is anything as a ‘discount brand’. They are all ‘value brands’ for the market segments they target. What is a mere discount for me will be great value for someone else. And vice versa. A discount is not derogatory. We love it when it is offered as a “customised” offer to us as an individual buyer. As long as the brand behaves confident and justifies its price offers, it offers great value. And that is what really matters.