5 brand consequences of heavy discounting

As a brand that loves its customers, you enjoy offering consumer promotions to show appreciation. After all, customers enjoy them, and keeping your customers happy is a top priority. But what happens when too many consumer promotions start impacting consumer expectations? 

We’ve listed five consequences your brand could face from offering too many consumer promotions.

1. Brand Perception and Value

Consumers are a skeptical bunch, and for good reason. Spending their hard-earned money on a product or service is an investment and they want to make sure they’re making the right choice in the brand they pick. So, wouldn’t it make sense for consumers to shop with a brand that regularly gives out discounts?

Not so much. From psychological studies to consumer surveys, it seems that consumers believe brands that constantly offer discounts are of lower quality. This perception can negatively impact consumers’ perception of the brand's value and quality.

2. Price Sensitivity

If you knew you could get an item cheaper than currently listed, would you pay the advertised price or wait for a better deal?

If you chose the ladder, chances are you’re price-sensitive, and you aren’t alone. According to SourcingJournal, most shoppers (93.6 percent) will wait for a discount at least occasionally, and nearly one-third only buy when a discount is available.

Frequent promotions can make consumers more price-sensitive and less willing to pay full price for products or services. After all, they know that if they hold out long enough, a cheaper price will appear.

To help curb consumers’ sensitivity to price, focus on the value you products and services can bring your customers, and less on the low price. Use limited-time offers and discounts sparingly and take the time to understand what your customers need and how you can fulfill their wishes. 

3. Customer Loyalty

Do your customers love your brand or your discounts?

If you discount too heavily, you might ask this question more than you’d like. Constant promotions can lead customers to shop with a brand primarily for discounts rather than for loyalty to the brand itself. 

Unfortunately, this means that other factors motivate consumers to participate in loyalty programs. According to HelloWorld, the main reasons people participate in loyalty programs include: receiving discounts/offers (43%), earning free products (27%), access to exclusive rewards (10%), and members-only benefits (9%). 

To help weed out consumers who are only in it for the loyalty perks, slow down on the offerings and focus on providing value outside of rewards. You can do this by highlighting your brand’s expertise and other areas that may serve your customers (i.e., providing personalized recommendations and support).

4. Customer Expectations

With so many brands to choose from and their fair share of consumer promotions, consumers know they have a lot of power over the consumer experience and their empowerment has left them with high expectations - regular discounts being one of them. 

Regular promotional offers can set a precedent, and customers may come to expect discounts before purchasing. This creates ongoing pressure on the brand to continue offering deals to retain customer interest.

In a press release from Gartner Marketing on consumer pricing, free shipping is no longer a differentiator but a consumer expectation. And they aren’t wrong. A survey by HelloWorld found that 75% of consumers expect discounts/offers from brands they shop with.

While you don’t have to do away with discounts completely, you can offer other incentives that speak to consumers’ expectations. Things like personalization, convenience, even corporate social responsibility practices, are high on the list of consumer demands. Incorporating practices can help you meet consumer expectations while also setting the tone as to what consumers can expect from your promotions. 

5. Price Perception

As a B2C marketer, you’re likely familiar with consumer perceived value (CPV) or the level of value consumers place on a product or service based on its perceived importance. In most cases, CPV has very little to do with the product or service itself. It can be determined by everything from consumer opinion to the product’s price.

One psychological study found that consumers' perception of product quality was lower when the product was promoted with a discount. This may have something to do with the general idea that people get what they pay for. If the price is low, people are more likely to believe that the product or service’s quality is also cheap, even if this isn’t true.

Considering consumers can evaluate your product’s value based on subconscious elements like pricing, it is important to be mindful of who your target audience is and how your pricing strategy can impact consumer perception.

What type of consumer are you targeting: value-conscious or luxury-minded?

Knowing this information can help you determine how to price your product and develop other marketing tactics that align with your brand.

Offering consumer promotions can be a great way to attract new customers, increase sales, and reward loyal customers. However, it's important to be mindful of the potential consequences of offering too many promotions, such as diminishing brand perception and value or undermining customer loyalty.

To avoid these consequences, it's important to use promotions sparingly and strategically. Focus on offering promotions that align with your brand values and that provide real value to your customers.