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How Small Discounts Play a Big Role in Marketing

MARKETING - DISCOUNT STRATEGY - BUSINESS Published On: May 19, 2022
Every shopper wants a good deal, whether it is small or large. So much so that last year, 92% of Americans used coupons while making purchases. It's important to make a solid promotional plan because so many consumers are accustomed to receiving coupons, discounts, and other promotions.

In both good and bad times, offering discounts, establishing a loyalty program, or developing promotional marketing methods can benefit your business.

The goal of your plan should be gaining and maintaining loyal customers. How can you provide your customers something of value? How do you build a sense of loyalty in your consumers and make them feel valued? You must have answers to these questions.

How Discounts Affect Customer Behavior

A price discount provides a monetary gain, which acts as an incentive to motivate customers to buy the product. Many previous studies have found that consumers perceive a higher level of savings for a product when a higher price discount is offered.
Here are some methods of how discounts affect customers and their behavior.

1.  Businesses Build a Trust in Customers by Offering Discounts

Customers have a strong belief that any discount offered by a company represents a genuine reduction in the original price. You could potentially raise the price of an item by 20% and then provide a 20% discount but consumers are smart enough to see through this. This implied faith in your company and the discounts it delivers generate enthusiasm for your offer. However, don't take advantage of this trust by offering unethical deals to boost your bottom line.

2.  Discount Create a Minimum Chances to Shop Somewhere Else

According to studies, offering a coupon or discount can deter customers from looking for the same product elsewhere. This is because discounts generate a sense of urgency to buy, which diverts customers' attention away from other possibilities. The impact of disincentivizing external deal-seeking is especially significant in the online business market, where price comparison shopping is common due to the abundance of competitors in the digital domain.

3.  Discounts Make People Happy

Saving money makes people happier in a broad sense, when you can offer your customers the possibility to save more money than the product's perceived value, their oxytocin levels rise. Customers will associate the positive experience they had with your company, forming a positive relationship with your brand when they recall it later.

Why Do People Get Excited about Sales and Discounts

Customers usually get excited when they see a discount on the product which they want to buy because it helps them to make huge savings. Of course, discounts attract new customers. Giving customers a discount could be just what they need to become your customer. Additionally, clients also bring new cross-sell and upsell opportunities, which means more money in the long run.
Discounts encourage customers to buy sooner. This is due in part to the concept of scarcity, in which customers recognize that discounts aren't constantly available to help them save money.

How Do Discounts Motivate to Buy More Items

Discounts serve as a ploy to attract more customers to your store because consumers want to buy products on sale. If your discount is only valid for a limited time, make sure to mention that while advertising the discounted items.
People are likely to miss out on saving money if they do not purchase the product immediately, at the discounted price. There is a sense of urgency. Discounts operate because people are afraid of missing out.

How Small Discounts Play a Big Role in Marketing

However, it has been proven that using wording like "Get $ off" encourages individuals to buy more, even if the other products are not on sale.

How Discounts Affect the Enjoyment

While discounts make customers happy when the product was consumed right away, they reduced enjoyment when the product was consumed a week later. Paying only 50% while believing it to be the regular price (thus not viewing it as a price reduction and thus not psychologically benefiting from a discount) had no effect. This suggests that the phenomena come from perceived discounts rather than actual paid prices.

On the other hand, people who paid full price but didn't use a thing for a long time would have loved using it considerably more, even if they felt bad about paying for it. 

This increased enjoyment comes from a higher drive to psychologically recover the expense of purchasing the product at full price, and as a result, more attention is directed to the product's enjoyment during use.

Why Price is Important to Consumers

You can go anywhere in the world and still find that pricing is the most important factor in determining where and when to shop for many people. Promotional deals, customer service, the retailer's reliability, choice, and convenience are all elements that shoppers consider.
Pricing is significant because it establishes the value of your product for both you and your customers. It's the measurable pricing point that tells customers whether it's worth their time and money. 
Customers purchase less when prices are high and more when prices are low. But this is not the same for producers, when prices are high, they attract more to the market, and when they are low, they attract less to the market. As a result, prices let consumers and producers decide whether to buy (demand) or sell (supply/produce) a specific good or service even in grocery shopping as well.

Effects of a Price Discount on Consumers' Savings Perceptions

According to the affect-as-information concept, affective feelings can convey information and serve as vital cues to guide judgment and decision making. As a result, effective sentiments can lead to a higher or lower evaluation of a particular object. Although no study has looked into the effect on perceived savings, some studies may have shed some light on the topic.

How Small Discounts Play a Big Role in Marketing

According to previous marketing studies, price discounts have both positive and negative effects on customer assessments and purchasing behavior. Promotional impacts can be classified into three categories: economic, informational, and effective. They claimed that a price promotion's final effect on purchasing decisions is a mix of positive and negative economic, informational, and affective influences.

Types of Discounts that Make Customers Happy

As you can expect, there are numerous ways to implement promotional strategies. Here are some types of discounts that usually customers like:

  • Seasonal Discount

Cyber Monday weekend is the best example of this type of promotion. The weekend marks the start of the retail holiday season, which has some of the year's best deals! Christmas and birthdays are excellent occasions to take advantage of seasonal or annual activities. Consumers will be shopping for products for these holidays and occasions year after year.

Consider providing customers with a birthday discount or a one-day annual sale with exciting discounts and deals.

  • Buy One Get One

What could be better than a 50% discount on two products? If you want to increase cross-sell opportunities, use the "buy one, get one free" method. Try it with complementary products or even two of the same product category (e.g., buy one graphic tee, get one free).

  • Free Shipping

There's no doubting that free shipping is a major topic these days. Even if faster delivery times are becoming more common, many buyers are ready to wait longer when free shipping is given.

Do research to determine how important free shipping is to your customers. Will your customers pay $100 to get free shipping or simply $50? These experiments will show you how to use free shipping to boost your promotional strategy.


How Small Discounts Play a Big Role in Marketing

Conclusion

Today's eCommerce businesses are scrambling to increase online sales. Boosting your promotional strategy with various discounts and free shipping can boost sales and inspire client loyalty in both good and bad times. Create a long-term strategy that rewards both your customers and your company.

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