• Jennifer Fortney

Over Discounting Can Kill Your Brand and Destroy Perceived Value

It’s a common story of a common marketing mistake: Over discounting.

New businesses and startups often believe that the best way to generate initial sales and drive

brand awareness is to offer frequent discounts. It's an understandably easy trap to fall into. The

problem is that doing so (sometimes on an ongoing basis), and not making a discount or sale “special”, can erode the perceived value of your product, service and brand among customers.

Since the Great Recession, and thanks to the “Groupon Effect” (truth be told Groupon wouldn’t be Groupon without the recession) consumers are more aware that they don’t necessarily have to pay full price for the items they desire (Enter sites like Wayfair, Overstock and others). It’s knowing and understanding this that should drive your approach to offering discounts.

Over discounting is a result of the feeling of desperation to sell.

If you’re a company with a limited budget and a desire to reach as many people as possible, it is tempting to run long-term ads on social media with a special discount, or even the same discount over and over again. These companies “sell” but fail to boost their value proposition, the benefits, positive customer experiences or third-party reviews, which we know are the most effective types of social media posts to boost.

Discounts or sales are meant to be special occasions, for lack of a better term, for the consumer. They are the few times a year when a consumer can get the best deal. Think about it, we’re all trained, by now, to anticipate President’s Day Sales, and the like. For true deal seekers, they save up to shop on these days; these sales. There is a reason that people walk out of Bath & Body Works with huge bags a few times a year. For others, the deal, or discount, is not as important as the quality and perceived value you offer with the pricing you’ve fixed.

Over discounting tells the consumer that your product or

service is not really worth the fixed price.

Many companies simply have a difficult time communicating the value that their product or service brings to the market – through copy and effective imagery. Seems ironic, doesn’t it? One would think a company would know how to tell its own story. It’s something I see often, and why companies typically bring someone like me in – to help them flush out a story that is compelling and creates an emotional attachment with customers.

Telling the right story, with the right message, through the right means is key to both attracting the discount buyer and the value seeker. Value is not about being “inexpensive”. It’s about communicating to customers how you solve their problems for a great price; how you provide better quality than the competition and so much more. That’s the perceived value takeaway for consumers.

If you can connect with your customers on the emotional level that will trigger a desire for your product, then you will effectively trigger the purchase.

How to Discount Strategically and Responsibly:

  1. Define and understand your audience. This is NUMERO UNO. No marketing strategy, even discount promotions, can be successful without understanding your audience and how to communicate to them.

  2. Follow industry and seasonal sales trends for discounting to target true deal shoppers and potentially impulsive purchases (i.e. end of year to move inventory or old models and increase Q4 revenues)

  3. Create one time of year sales promotion around a day, holiday or month that is relevant to your brand and have fun with it. (i.e. National Eyewear Day or International Bath Day). Make this your clearance sale and really blow it out.

  4. Utilize affordable social media advertising platforms to build your brand by communicating the company/product’s true value to all customers. This will not only drive brand recognition but also a community of company ambassadors that you can reward in creative ways. If you advertise your discount/promotion correctly, you will see an influx of sales and increased web traffic. From here you can understand how people use your site and why they aren't buying.

  5. Go where the deal shoppers are. If you really want to drive sales quickly, then it’s worth it to give up a percentage of sales for some name recognition on sites like Groupon or Overstock. The people who shop there are loyalist and you can tap into an already established audience of people who just may eat up your discount.

  6. Offer discounts for first time customers. This is a great way to encourage trial of your product or service. If you deliver a great product/service, and they see it as meaningful to their lives, they will return and tell others - encourage social shares for discounts is another great opportunity.

Strategic discounting is a smart, thoughtful marketing tactic that when combined intelligently with other marketing tactics can grow your brand the way you desire.

Discounts through digital marketing seems like the most effective, affordable and efficient way to grow your customer base, communicate and generate sales, however, used incorrectly and without a strategic approach can leave you out thousands of dollars and little return on the investment. Successful marketing – whether digital or traditional – is all about strategy. Make the time to be smart and thoughtful about your approach, your story, and your return will soon be far worth the time, energy and expense.

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