Starting a business and taking it forward requires a good amount of planning and implementation of novel ideas. Through various advertisements and other promotion techniques, the glory of your brand can be propagated by the word of mouth. Among the many strategies they take up, the most attractive one for the customers is the discount offers for their favorite products.
Nobody likes the idea of losing money even if it’s for the purchase of their favorite products. People always look out for discounts because it provides a feeling of not losing so much money even though it may be only partly true in reality. Since its crucial point in marketing and sales, the company should give proper care while deciding the discount rates for different products.
Providing discounts for materials is a great way of luring customers into your shops and gaining desired profits. But any action done without proper research and calculations can be of fatal impact to you and your brand’s financial structure. Any mistake could result in the deterioration of your name and product.
Therefore it advisable to look out for the necessary details before granting discounts to customers. First of all, align all actions to a fixed list of objectives. The right amount of background work on tentative discount rates and corresponding profit reports can help you taste success. Following are a few steps you should focus on:
The category and quality of your brand
It is crucial to identify the category of your brand before placing it under any discount rate. For instance, if a particular product of yours falls under the category of fast-moving consumer goods (FMCG), it is not desirable to fix a high discount rate. It also directly depends on the quality of your product and brand name. If it is not premium, then the rate of discount should solely be focused on the available stock and target income. ‘Buy one get one free’ offers are the best ones to implement in such situations.
The season of the market
The requirements by customers vary a lot with corresponding to the seasons or festive occasions. The retailers have to keep these in mind while deciding on the discount price. This has to go in tally with the availability of products. In case you need to empty the old stock of products, then devise a plan including mass discount rates. The sales should be controlled according to the intake and response from buyers.
The aging of your product
Since the sales market is a very unpredictable place of action, the businessmen should be alert and vigilant. You have got the responsibility to sell off as many products as possible and also devise a plan for dealing with those which couldn’t get sold. While providing alluring discount rates, no compromise should be made on the quality of the product. This shouldn’t be leading to the dissatisfaction of customers. There should be a proper balance between the two.
In desperate cases where the product is aged a lot, some compromises need to be made while fixing its discount price. The resulting tension can be solved by clubbing them with other products and providing combo offers. If you are planning to get rid of your liquidation stock, the end of season sale (EOSS) is the best way to go about it. Flash sales during festive seasons can also help in increasing customer response.
Keeping up with the annual target
Before starting on a business venture, the primary work should be done on the paper regarding the flow of income. A record of the total earning, income, and expenditure should be kept up to date. The profit and loss (P&L) statements should be monitored every month. Based on the balance sheet, the discount offers should be implemented to cancel off payment loss. If in any case the revenue target of the previous month is not met then it should be added and compensated in the next month’s sales. The discount rates in flash sales should be fixed accordingly.
Eying on the competition
Before fixing the price of a particular product of your brand, you should be aware of other rival brands offering competition in the same area. The difference in prices of the two brands can make a huge difference collectively. By understanding and analyzing the trends in the market, you’ll get a clear picture of how to implement the plan. Even the slightest 1% increase in your discount price can result in a massive profit gain for your brand.
By keeping all these points in mind and acting accordingly, you could surely devise a plan and fix the discount rates for the products in a way that ensures final profit.