Sale!<br />SALE<br />DISCOUNTINGThe Art Of Selling!<br />ventafemenino<br />ventefeminin<br />
What Is A Discount?<br /><ul><li>Discounts are reductions to a basic price of goods or services.
Specific type of marketing promotion in which invite shoppers to save money on specific products or product groups.
Can occur anywhere in the distribution channel.
Modify either the manufacturer's list price, retail price or the list price.</li></li></ul><li>History Of Discounting<br /><ul><li> The Latin roots of discount reflect the early counting table origins, thus indicating a reversal or movement away from the count from ‘COMPUTARE’.
When the French picked up the practice they called it “D’ESCOMPTE”.
By the middle of the 17th century, the English had begun to apply the practice in the pepper trade with Holland using the current word “DISCOUNT”</li></li></ul><li>Why Create Discounts?<br />The purpose of discounts is to:<br /><ul><li>Increase short-term sales
Move or liquidate out-of-date stock known as “dead stock”
Introductory Promotion</li></ul>Example: Mumbai Mirror with TOI<br /><ul><li>Stock Clearance
Market Competition</li></li></ul><li>When Are Discounts Offered?<br />Discounts can be offered based on the type of product, goods or merchandise they have in stock. Consumer durables, apparels and accessories are usually discounted as follows:<br /><ul><li>Clearance Sales
Exceptions: FMCG’s can be discounted year round by various promotional offers such as buy 2 get 1 free or giving extra quantity for the same price.</li></ul> E.g.-Big Bazaar, Food Bazaar, Dmart. <br />Godrej’s Nature’s Basket and Reliance Fresh which caters to the upper middle class and upper class<br />
Is there a boost in sales turnover during discounting season as opposed to the year round sales<br />
Where are the Discounts Given<br />The place for discounts depend on Demographic Segmentation, the variables of which are summarized below-<br /><ul><li>Age-Marketers design and promote products differently for different age groups
Gender-Gender segmentation is widely used in consumer marketing.
Income-Many companies target affluent consumers with luxury goods and convenience services.
Lifestyle- Marketers are increasingly interested in the effect of consumer "lifestyles" on demand. </li></li></ul><li>Has “consumer brand awareness” lead to a has boost in sales during the sales season?<br />
Consumer Psychology</li></li></ul><li>The Business Cycles<br /><ul><li>BOOM: A period of fast economic growth.</li></ul> Where:-<br /><ul><li>RECESSION: A period of slow down in economic growth.</li></ul>Where:-<br /><ul><li>High output.
Mumbai Mirror was distributed as a complimentary copy with Times of India for a month on its launch.
Free sachets of new products under the same Umbrella are distributed with old products. Example: Surf Excel Oxy Blue sachet distributed free with Surf Excel packs.</li></li></ul><li>II] Growth Phase<br /><ul><li>Period of rapid revenue growth
Maruti 800 price was dropped after the discontinuation was announced.</li></li></ul><li>Consumer Psychology<br />
The Consumer Psychology<br />Defined as - analyzing “what makes a consumer tick”.<br />It deals with-<br /><ul><li>The psychology of how consumers think, feel, reason, and select between different alternatives .
The behavior of consumers while shopping or making other marketing decisions.
How consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer.
How marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer. </li></li></ul><li><ul><li>Consumer psychology in relation to discounts</li></ul>General consumer behavior at the time of discounting season are as follows-<br /><ul><li>Skeptical
Have a positive outlook hoping to see the light at the end of the tunnel
Make every attempt to save every penny they can
Primarily includes the middle and upper middle class
Impact:</li></ul>Marginal affect.<br /><ul><li>Impact:</li></ul>- Highly affected by discounts. <br />-Shopping patterns are dependent upon the commodities in question.<br />
Impact of Discounting<br /><ul><li>In the case of essential goods</li></ul>Consumers under this segment will purchase more goods at the time of discount.<br /><ul><li>Examples-toothpaste, food items
In the case of treats</li></ul>Treats mainly relate to commodities which are not essential in nature but consumers none the less engage in purchase of these commodities<br /><ul><li>Examples- apparels </li></ul>Heavy discounting does pull in consumers to come and spend. <br />
<ul><li>In the case of durables</li></ul>These include products which have a long life <br /><ul><li>Examples-washing machines , refrigerators ,etc</li></ul>Heavy discounts do boost sales of these commodities but only marginally.<br /><ul><li>In the case of Postpone-able goods</li></ul>These include commodities whose purchase can be avoided <br /><ul><li>Examples- movie tickets , holiday packages</li></ul>Discounts schemes such as –<br />Vodadfone Tuesdays<br />Tour packages<br />
Discounting : A Marketing Strategy Or Tactic? <br />
Marketing Strategy<br />Discounts can also be used as a strategy by companies. Changes in pattern of expenditure of consumers may be there because of the strategy , used by the companies. But such discounts in the long run may loose their shine as consumer might become more aware and such a way of image and brand building might not work. Such a strategy has proved to be successful so far and is still working. There still exits gains which can be appropriated.<br />
Classification on the basis of Pricing Strategy<br /><ul><li>Low price product and low profit margin
High profit margins</li></li></ul><li>Setting the Equilibrium Price<br />
Marketing Tactic<br /> Most of the retail apparel brands get their big part of sales while their products are being sold at a discount. This is a pricing tactic which is being followed by these companies. This works more from the psychological side of the customer. It is like doing marketing throughout the year and getting fruits of that marketing during discount periods. During such periods of these companies run out of their stocks by the end of discount period. Signifying that these companies often achieve their targets and their tactic pays off.<br />
Indian retailers believe discounting is the last resort to sell their merchandise<br />
INTRIGUING CASE STUDIES:1. THE LOOT2. Foreign Brands.<br />
The LOOT<br /><ul><li>“The LOOT” is a multi-brand discount store, offering customers a wide range of products in apparels, footwear & accessories for men, ladies and kids with discounts ranging between 25% - 60% – throughout the year.
The store retails brands like Reebok, Puma, Levis, Red Tape, Lee, Wrangler, Spykar, Allen Solly, Van Heusen, Eccentrics, Ruff, Gini & Jony, Lilliput, Killer, Bus Stop, Indian Terrain and more 100 brands.
The LOOT currently operates over 120 stores in India.</li></li></ul><li><ul><li>Quality Goods at Reasonable Prices plus Value Additions such as a good shopping environment, changing rooms, etc.
Discounting as a strategy as the company tends to concentrate on sales by maintaining a lower profit margin.
The company concentrates on Sales Volume more than the Profit per Product.
They have targeted the middle class Indian consumer who has now become more brand conscious.
Recession has led to an increase in the sales and market share of The LOOT</li></li></ul><li>United Colors of Benetton<br /><ul><li>Global fashion brand owned by Benetton Group: HQ - Treviso, Italy
Founded by Benetton family in 1965; now global network of 6200 stores in 120 countries with yearly turnover of €2 billion
Casual clothing marketed as ‘United Colors of Benetton’
Ads by Oliviero Toscani contain striking images unrelated to the products</li></ul>E.g. Ads on AIDS, war, death row inmates and such controversial subjects<br /> ISSUE : Below average sales growth in India<br />
What UCB did…<br /><ul><li>UCB’s key competitors in the clothing market are Levi’s, Pepe, Wrangler, Lee, Tommy Hilfiger, WLS etc
To counter other international brands, UCB has international retail formats offering wide range of styles and options.
Advertising different from competitors – on lines of international campaign – controversial but cut-through
Distinctiveness from competitors seen in exquisite Italian styling and options and international garments at Indian prices
Gurgaon factory to increase scale to compete - but higher-end garments imported from Milan, Italy.
Thereby reducing their inventory cost and thus used discounting to promote their brand.
Thus they adjusted their prices for the Indian consumer.</li></li></ul><li>CONCLUSION<br />