Thursday, January 13, 2011

Short Term Gains = Long Term Loses?

From Marketing

How Coupons Discount Your Brand

"The recession has caused lots of companies to panic," writes Laura Ries at Ries' Pieces. "And when companies panic, they print coupons and throw up sale signs. Look in your mailbox, your email inbox or your newspaper and you will see what I mean. Everybody is having a sale."

There's only one problem, she argues: Though deep discounting works in the short term, it causes long-term damage to your brand. This is why:

  • Customers are thrilled when they first receive coupons and offers for your products and services. Who doesn't want 10, 20 or even 50 percent off?
  • But discounts train customers to think your regular prices are too high, and to wait for the next coupon before they shop again. They might eventually refuse to make any purchase without a coupon.

For some companies, the culture of discounting has spiraled out of control. "Try checking out of one of these stores without using a coupon and even the sales clerk looks at you like [you're] a pathetic loser," she says. "Nobody pays full price here, what's the matter with you! She may even reach down to pull out a coupon of her own to give you."

Resisting the urge to offer coupons isn't easy—especially when everyone seems to be doing it. But protecting your brand now will provide better overall results in the long run.

The Po!nt: As Ries sees it, discounting creates a lose-lose situation by lowering both your customer's opinion of your brand and your profits.

Source: Ries' Pieces.

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