Why Are Discounts Necessary?

Have you noticed the abundance of discounts being offered everywhere? Sales, promo codes, and coupons seem to be ubiquitous. For buyers, this is incredibly enticing—they get the products or services they need at reduced prices. But what about business owners? How do discounts help them grow and profit?

In marketing, a discount is a reduction in the price of a product intended to achieve specific objectives.

For buyers, discounts primarily mean saving money. Everyone loves getting the best deal possible, except perhaps when it comes to luxury items. Discounts not only boost the online store's sales but also draw in more customers.

However, today's market has normalized discounts to the extent that customers expect them and often hesitate to buy without them. This creates challenges for online stores. Small discounts (0-5%) typically don't attract much attention, so a well-planned discount strategy is crucial. Discounts need to be at least 15% to effectively influence customer behavior, especially in the online realm where price comparisons are easy.

A common mistake businesses make is offering discounts without a clear purpose, simply because it's the trend. This can lead to losses. Therefore, before implementing discounts, it's essential to outline a clear plan.



Key Objectives for Offering Discounts:

• Building Customer Relationships: Offering a permanent discount to foster long-term loyalty.
• Increasing Sales Volume: Attracting more customers with attractive pricing.
• Moving Inventory: Selling off seasonal, slow-moving, or outdated products.
• Highlighting Events: Drawing attention to new store openings, new product lines, or special events.
• Boosting Customer Loyalty: Enhancing overall satisfaction with the store and its products.

Next, calculate potential profit/loss by considering the cost of goods and overheads. If the business can maintain profitability, a discount can be offered.

Effective communication about the discount through the website and direct notifications to customers ensures the promotion doesn't go unnoticed.

Types of Discounts:

• Seasonal Discounts: Offered at the end of a season to clear out seasonal items.
• Holiday/Event Discounts: Linked to holidays like New Year’s, March 8th, or major sales events like Black Friday.
• Personal Discounts: Targeted at specific customers, such as first-time buyers or those who share store news on social media.
• Bulk Discounts: Applied when customers purchase large quantities.
• Cumulative Discounts: Encourage repeat business by offering increasing discounts based on the total amount spent over time.
• Referral Discounts: Customers get discounts for referring friends, who also receive discounts.
• Group Discounts: Discounts for a group of buyers based on the group's total purchases.

In conclusion, discounts can effectively boost profits if implemented thoughtfully. Rather than sporadic promotions, develop a comprehensive discount strategy, including loyalty programs and engaging marketing campaigns tailored to your target audience.

By using discounts wisely, you can attract and retain customers, ultimately driving long-term business success.