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Discounting - Do's and Dont's

Are you about to embark on a marketing campaign offering ‘mega discounts’? 

Yes,

then keep reading to gain value tips on what DISCOUNTNG is all about, importantly what it takes to make it a successful campaign! 

Simply put, the Do’s and Don’t's!  

  • DO your planning, develop your Discounting Strategies
  • DON’T ‘jump in, cutting prices without prior preparation.

What's it all about!

In a nutshell, the aim of ‘discounting’ is to drive sales by reducing the original price of goods but it takes careful planning to achieve the results you want.  

‘Discounting strategy’ is the planning on how to offer discounts and specials and still make a profit! For example, short-term discounts can motivate potential consumers to make an immediate decision to buy.

Discounting is a strategy used for a number of purposes such as; 

  • to attract, persuade, motivate new, potential and inactive clients.
  • to help move ‘slow or old’ stock 
  • to achieve sales targets during a down or slow period 
  • most importantly, to improve cash flow.

To help, here are 5 Discounting Strategy Tips:

  1. Discounting methods  
  1. Is discounting worth it? 
  1. Types of Discounting Strategies 
  1. Timing your Strategies 
  1. Does discounting affect your sales targets 

1. Discounting methods include:  

  • Cash:  discount for cash payment instead of credit 
  • Loyalty: discount for loyal, frequent customers/clients 
  • Trade: discounts for trading in a similar product
  • Quantity: encourages purchase of more of the same product 

2. Is Discounting worth it? 

 Discounting requires careful planning.  It can attract more customers but before offering ‘cut’ sales prices you need to consider the following;

  • Determine, calculate the best discount price that still provides a profit
  • Establish your current profit margin, markup and break-even point
  • Know what your competitors are offering and doing
  • Decide the ‘sales price’ period, time
  • Develop a Marketing Plan targeting current, potential and past customers

3. Types of Discounting Strategies

The type, such as examples below, will depend on your Business type and customer base. It is essential to know your customers, to have an understanding what strategy method is likely to attract them.

  • Special deal, offer or price
  • Package/ Bundle
  • Valued added
  • Seasonal, Occasion
  • Quantity purchase

4. Timing Your Strategies

Don’t have a ‘willy-nilly’ approach. It’s all in the timing, it's been said before! Different strategies work better at different times. This is about planning in sync with specific events, milestones etc. For example, seasonal sales, Festive celebrations, Easter holidays, school term breaks. 

5. Does discounting affect your sales targets? 

Do your homework. Before embarking on a discounting promotion it is essential to understand the workings of your pricing structure. That means, if changing the sales price and markup of your products you need to understand how it will affect your profit margins and sales targets. 

Do your sums. You need to know your gross margin, markup ad breakeven figures to conduct a sale without making a loss. That is calculate, to work out how the discounted price will affect your profit margin. In other words, the sales increase needed to counter the effect of discounts on your gross margin.

Use these Tips to develop your Discount Strategies that will allow you to offer discounts and specials while still making a profit! 

You are ready now to start your CAMPAIGN!