Waitrose… Pizza Express … does aggressive discounting destroy brand value?
It seems like all people want at the moment is the cheapest deal, and that lowering prices and putting huge sale posters up is the only way to entice consumers into a shop/business. But with sale savvy shoppers and the help of internet comparison sites how far can this go? Have prices finally reached rock-bottom and how has this aggressive discounting damaged the perceived value of these items/services? Have we allowed the financial panic to reduce brands’ value? The possible recession solutions have raised so many questions for marketing professionals and as we start to see light through the economic gloom the answers are starting to become clearer.
In hindsight it seems short-sighted of businesses to look at aggressive or competitive discounting as the complete recession solution, for example will Pizza Express ever be able to return their prices to the level they were 2 years ago? Many people only visit Pizza Express if they have a 2 for 1 voucher because there’s always an abundance of vouchers online and you can basically download them whenever you like. A lot has changed from 2 years ago when the brand was known to belong in the upper level of high street chain restaurants, to now when you might think of it as a discount Pizza restaurant. It has not only changed our perceptions of the price but also with it the type of people who eat there – in many people’s view it’s not the experience it once was. By heading such an onslaught of discounts, this recession solution has effectively but gradually and probably unintentionally rebranded their business and the brand value has suffered.
Another example of this recession solution is Waitrose, who introduced their Essentials range, giving customers the opportunity to buy quality produce at a low price. This was in response to reports that supermarket shoppers were switching to own-brand goods to save money. Waitrose has always been known as a more exclusive supermarket and this is surely the primary reason people are brand loyal and choose to shop there; so if people are prepared to pay a premium for your products why change that? Waitrose positioning themselves using the same marketing techniques as less aspirational brands was always going to pose the risk of missing the target market. It’s still early days but isn’t it potentially damaging to long term profits if the brand were to be devalued any further or reach the point where their identity was forced to change as Pizza Express’ has?
These are just two questionable aggressive discounting decisions but they are definitely not alone. Is it therefore possible to give customers what they want whilst marketing your business out of the situation? Reducing the price does tap into the mood of the nation but there are ways to do this which make the discounts appear exclusive rather than the norm. Surely this is less damaging to perceived brand value?
Discount hunters often belong to externally managed loyalty and membership programmes or discount clubs that offer their members’ discounts on a variety of products and services. The discounts offered are seen by members of the discount club as a privilege and the brands’ value remains higher than the discount price.
A good example of this is Champneys Health Resorts which is a company offering premium pampering breaks. It’s important that they remain as an elite product because that’s what makes the product/services appealing, so to aggressively discount them would damage the perception of exclusivity. This doesn’t mean that the recession does not hit their business as it has other businesses but they have to approach discounts in a different way. Champneys have chosen to put a select few offers on their website but also offer a discount to members of The Rocket Marketing Group’s loyalty and membership programmes. The brand is still seen as luxury because the offers are presented in a way that makes customers feel like the discount is special. The 15 % discount they offer The Rocket Marketing Group’s loyalty and membership programme club members is a great offer and has prompted a number of redemptions.
Businesses use loyalty and membership programmes to market their brands to consumers who are specifically looking for a special offer, enticing them to become brand loyal. The idea being, that the members of the loyalty and membership programme or discount club will become brand loyal to the businesses within the savings clubs by giving them what they want in a controlled way. These savings clubs are often offered to businesses as a free marketing option with the proviso that they offer club members a discount on their brand.
The Rocket Marketing Group operates a number of loyalty and membership programmes helping businesses create brand loyal consumers, driving both retention and revenue.
Contact Us for details of how a loyalty and membership programme (discount club) can work effectively for your specific businesses.
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