the discount story

8/10/2019 The Discount Story

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The Situation

Recently while shopping with my Mother in Reliance Trends, I noticed a curious reaction of

hers towards the discount coupons that were being distributed by the store.

Reliance trends is a well-known retail outlet that has a good presence all over the country.

The store offers apparels, suits, dresses etcetera from well-known brands like 1! degrees,

denim. "eing fre#uent visitors we proceeded straight to the tees department, without much

attention to other details. $fter the purchase we proceeded to the billing counter, to pay a sum

of around Rs.%&'-. It was then that the billing person informed us that we had #ualified for

a discount coupon for Rs.1'- on the purchase of Rs.%'- or more from the ne(t week.

)ike all its competitor the store also conducts two yearly sale, one in autumn and the other in

winter. Therefore the coupons were #uite une(pected and useless as well, since neither my

mother nor I had anymore shopping planed in the near future.

*e were further informed that the +tore was offering discount coupons of Rs.%'- to every

customer on the purchase of Rs.'-. I was ust confirming the purchase stating that we did

not wish to shop any more when my mother suddenly re#uested the biller to hold the bill, and

proceeded to shop for Rs.1&'- more.

This buying decision of my mother baffled me a lot and hence I decided to make this the

topic of my study.

Introduction:

1) Types of discounts

To understand this particular nature of consumer I first decided to understand the different

types of discounts offered by the stores to attract customers. $ few types of discount offers

that can be commonly seen around us being used by the shopkeepers are as follows-

1/ &0 %0 off 2 known as the percentage off or Rs. 3ff discounts.

%/ "343 5"uy 3ne 4et 3ne 6ree/ - generally a %&0 discount, effective in moving

products.

7/ 8uantity 9iscounts - 9iscount valid only on purchase of a certain #uantity of product.

/ 9iscount :oupons - :oupons can be redeemed at ne(t purchase. ;sed to encourage

buyers to purchase again.


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Literature Review

It is a common knowledge that 9iscounts attract consumers towards the product resulting in

increased sales for the shopkeeper, but how do different consumers react to the different

discounts that come their way is not a very common knowledge. $ few of the papers that I

researched for my study gave deep insights into the nature and behaviour of the consumer.

They are as follows

1) 9iscounts may lead to a consumers developing a self-concept about them called ego-

e(pressive. /. There might be a sense of

accomplishment or a thrill of feeling of achieving a victory over large corporations?.

This feeling of being a smart shopper motivates the consumer to purchase more and

that also at the duration of the sale or discount regardless of the re#uirement or not.

=owever the feeling of the being a smart shopper is not e#ually important for each

and every consumer. The paper goes on to say that this feeling is most important or

plays a dominant role in the lives of those consumers who, do not have sufficient roles

or responsibilities that might give them the satisfaction of being efficient and

competent. This re#uirement is satisfied by them being a smart shopper. @(amples of

such consumes could be non-working mothers, retires could be another e(ample. This

particular hypothesis has even been proved by 5Aarasimhan 1!>B Cingsbury 1!>D/

and "awa and +hoemaker 51!>D/. There have been two theories put forth by each of

them for this particular nature

a/ Aon-working women are more deal prone, because they have more time on their

hands.

b/ Aon-working women are more deal prone, because shopping forms a part of their

daily activities.

These discounts also have an implication for the retailersB first of all consumers rather than

optimising their purchase decision go for satisficing themselves. 3f all the available items for

purchase their might be none to the liking of the consumer, or their might be a situation

where the consumer is stuck with two products where he cannot decide which to buy due to

the discount factor. The consumer does not out rightly likes the product but ust to take the

benefit of the discount might purchase a product that is almost to his liking. This gives a huge


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opportunity to the retailers to move their product which otherwise would have ended up in

their inventory.

2) $nother interesting find was that though consumers are highly motivated by the

discounts that are offered on the product, they are not often convinces of the

discounted priceB i.e. they discount the discounted prices. Though true for all the retail

stores, the level of discounting of price varies from store to store. This is a factor of

siEe of the store, the brand name of the store, the perception that the consumer may

have about the store. Therefore, a similar discount may not produce the same buying

motivation for two different stores.

$n important implication for the marketers from this study is that competing on discounts

could be tricky for them. There are two maor reasons for this

1/ The consumer might not perceive the shop to be at the same level as that of the

competitor, hence giving an e#ual amount of sale at the same time, may increase

the sale but will not meet its full potential. If the obective is of solely competing

then the true value of the shop must be determined and discounting must be done

as per the results.

%/ If the shop is perceived inferior to the competitor, the shop might have to offer a

bigger discount. This might be matched by the competitor. @ven if it is not,

discounting more will lead to higher stress on the margins and lesser profitability.

3)$nother interesting find was that consumers reacted differently to different formats of

discounts even if they were giving the same value to the consumer. To understand this better

consider the following 9iscounts

1/ Rs % of Rs1 tee.

%/ $ T@@ worth 1&'- available for Rs.11& '-

7/ "uy a shirt worth Rs.1& and get the second one F &0 off.

$ study conducted on similar lines revealed that most of the consumers thought that the third

one was a better deal, however, if proper number crunching is done it will be revealed that the

second is a better deal. The first one provides a discounts of %&0 or less whereas the second

one provides a discount of 70. 3n a more in-depth analysis it was found that the figures that

stare at the consumers faces is what affects their decision. Thus even the framing of discounts

can have a huge effect on consumer buying decision.


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The marketing implication of this study is that though discounts do help in attracting more

customers, yet the way in which the discount is presented also has an effect on the customer

=ence the retailers must e(periment with the framing of discounts and determine which one

is better for their product before taking out offers.

Back to the probe!

$fter reading so many researches on discount it became a lot easier for me to discern my

mother?s nature in the mall on the day. Initially I thought of my mother?s nature as irrational,

wholly motivated by the huge discount offered. The reason being that if the discount is

critically reviewed, it is not a &0 discount but a %&0 discount on the entire purchase.

6urther there was no re#uirement for the products that were purchased due to the discounts

coupons.

=owever, after the reports above, I can confidently say that the following factors contributed

to my mother?s purchase the other day

1/ Most of the products on sale were branded, and hence perceived of high value by my

mother. To be able to shop for them at a lower price than that available in the market

gave her the feeling of efficacy and competence and hence a Gsmart shopperH.

%/ My mother being a home-maker could have brought the products because-

a. +hopping efficiently is one of the activities that give her the feeling of

accomplishment and competence. The very fact that many non-working

women oin social charitable causes also proves this point.

b. +hopping for the family is one of the dominant activities performed by my

mother, therefore she has a very good insight into the re#uirements of the

family on the long term basis. =ence seeing the sale she might have planned

ahead, and made the decision.7/ There was also a framing effect of the discount that came into the picture. The store

was actually offering a minimum discount of %&0. =owever the framing Rs.%'- of

on purchase of Rs.'- made the offer look like a &0 off. This had a bigger

motivation on my mother?s buying decision, than it otherwise would have.

$fter the purchase in reliance trends we came across a similar store Ma((. $ similar kind of

sale was going on in the store. ust to test my mother, I ested with her to go for another

shopping spree. The answer startled me and left me further confused than before. +he said

Gthe clothes here are not from big brands, and none of them would be according to my


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likingH. $t the time I pretty much concluded that my mother had spent enough for a day and

did not want to spend any more.

"ut that was not the case. In reality the clothes available in Ma(( are less e(pensive when

compared to reliance trends. $lso my mother did not perceive the material to be very fine as

compared to that of reliance trends. Therefore as per my mother?s perception there was a

huge difference between the two stores. Thus the discount offer on Ma(( was not sufficient to

motivate my Mother to go and purchase something, perhaps Ma(( should have increased the

offer value, or decided to conduct the offer at some other time. This difference coupled with

the recent purchase led to the other buying decision.

"ther "bservations

9uring discounts many consumers end up satisficing rather than optimising is also trueB I

witnessed this first hand, when I and my mother were trying to make a purchase for the rest

of the amount. *e ended up buying a dress that both of though was good. =ad it been some

other day, neither of us would have brought the products.

#iscounts$ the too to se a products at a ti!es%

The answer to this could be answered by a very popular phrase GToo much of anything is

badH. 3ccasional discounts do increase the #uantity of the products that are brought in the

discount period. This increases the revenue for the store for that period but fre#uent discounts

make the consumer to e(pect discounts, and they stop purchasing product in the normal

times. This can hardly be good for any store.

6re#uent discounts also affect the trust a consumer places in a particular shop. If a shop gives

fre#uent discounts then the consumer may begin to think that the shop maintains a high mark

up, and hence products without a discount must not be brought from that particular shop.

Coutons suffered from such a problem and now are forced to sell all products at a discount.

Therefore marketers must use this tool strategically and make the most out of it.


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References

1/ Robert M. +chindler 51!>!/ ,JThe @(citement of 4etting a "argain +ome =ypotheses

:oncerning the 3rigins and @ffects of +mart-+hopper 6eelingsJ, in A$ - $dvances in

:onsumer Research Kolume 1L, eds. Thomas C. +rull,

the discount story

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