Value of the Discount

[Katie Weaver]

Chapter Seventeen (page 491) discusses Sales Promotions. The purpose of sales promotions is, “to draw a stronger and quicker buyer response, including short-run effects such as highlighting product offers and boosting sagging sales”(Kotler 2012 p.491). These promotions could be coupons, special offers, or contests. The intention of a sales promotion is to draw attention and lead the consumer to the product, bring value to the consumer, and instant engagement to purchase now. American culture has shown their approval of these offers through shows like, “Extreme Couponing” and events like, Black Friday. I have recently participated in Black Friday shopping and one of the stores I went into was using their promotion as, “Everything in the store 50% off until noon”. It was a frenzy in there but as I was looking at shirts, I realized that the price was raised significantly therefore, half price was only slightly under traditional cost of the item in the first place. This leads me to ask, do sales promotions really bring value to the consumer? Do you trust the quality of the items placed on sale with deep discount?

[lindsey...@yahoo.com]

GRANT GINGERICH'S REPLY

 

To answer your questions, yes and no respectively. Many times customers find value in “savings” whether it be a coupon, discount, or limited time offer. How many times have we convinced ourselves to make a purchase because it was on sale, we buy more than we planned on to achieve the discount opportunity (buy 3 get 1 free), or applied for a credit card for a one time discount at a retail store. Whether or not there is any true value to the promotion, customers find value in the fact that they are “saving money”, when in all reality they may or may not be. Anyone that has shopped at Hobby Lobby, has seen the countless discounts down every aisle. This leads me to my next point.

 

The first perspective for a buyer towards a promotion is usually optimistic, but it takes an educated or guarded consumer to dig a little deeper to understand if there is truly value to the opportunity to take advantage of some rewards, savings, or rebate. Many times once considering the options, one can rationalize that these promotions encourage consumers to make purchases that do not align with our budget, is not necessarily a need, or that we may just be dooped by certain “savings” opportunities such as like the Black Friday example., Some sales may not be all they seem. For consumers it offers incentives and persuasiveness to make purchases, whether a justifiable purchase or not, and companies benefit from the sale. The company exists to make money. They are not offering the promotion because they are truly wanting to save customers money or spend less. In a world where transparency is becoming a necessity for companies, what are some examples of how a company can offer promotions that offer a win-win scenario?

On Sunday, December 9, 2012 2:13:13 PM UTC-6, Katie Weaver wrote:

[lindsey...@yahoo.com]

Lyn McKee's reply (my login is still not working using Lindsey's to post)

 

I believe that in order for it to be a win-win for both the buyer and the seller, the buyer must first do their homework on pricing so that they know if they are getting a deal or not and sellers need to decide if they are trying to make a profit on the item or just get rid of inventory to make room for new items.  Sometimes by depleting the inventory when new things come in the company can get componsated and make up what they lost from the old items and make a profit.  In regards to extreme couponing those people do their research and spend many hours strategizing the best deals and how to come out ahead.  These people definitely make a win-win for themselves but have invested alot of time and effort to make that happen.  One idea would be for a company to maybe do something like Katie talks about with having one day for a certain amount of time to offer everything in the store for 50% off.  Since this would be a short timeframe the store could probably recover and the sale numbers may be so high that they could make a slight profit.  If they didn't it would get many consumers visiting the store that may not have come in otherwise.  This could lead to customers coming back and shopping and paying regular price at a later date.  I agree with both Katie and Grant in that it is the perception of buyers of whether they are getting a deal or not.  It takes a diligient shopper to actually make sure sale items are truly a savings and not just a gimick. 

 

 

On Sunday, December 9, 2012 2:13:13 PM UTC-6, Katie Weaver wrote:

[Val Vieux]

Do sales promotions really bring value to the consumer which I would say yes on many accounts.  In Kotler (2012, p 491) the sales promotions draw responses by getting the attention of the consumer, incorporates incentives, and include distinct invitations to engage the transaction now.  For the consumer they may or may not be getting a bargain.  As Grant suggests in the example of buy 3 get one free is only a 25% discount.  However, psychologically the buyer hears "free" and believes they have a bargain.  If the value of the items is unknown to the customer, promotions and sales can get you drawn in to stores as Katie illustrates her black Friday experience when stores will have increasing prices with a reduced ticket price that again gives the illusion of a bargain.  If the stores can draw the customers into the stores, there is great certainity that they will purchase other items aside from the sale item that brought them shopping in the first place. 

 

On Sunday, December 9, 2012 2:13:13 PM UTC-6, Katie Weaver wrote: