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Saturday, January 12, 2013

The Right Discount Dynamic To Preserve Brand Equity

It's the classic branding problem:

  • The better your image, the better your brand equity - the higher the margin between your stuff and a commodity. 
  • But if your merchandise isn't moving, offering discounts is a short-term fix that leaves you leaking brand equity like the Titanic.

So how do you offer a markdown without seeming "cheap?" Target the method of discount to your audience. As follows:

  • Premium: Distribute fancy print cards, in person, to the luxury shopper who has already paid full price; provide fee-based credit card with discounts to loyalty club.
  • Semi-Premium: Mail "specials" to members of your loyalty club; provide no-fee loyalty card enrollment program
  • Mass market: Leak promo code virally, online; offer app-based discounts
  • Neighborhood market: Print coupons in the Sunday paper and/or neighborhood newsletters; tear-offs in the local Starbucks

The bottom line: Discounts are not inherently deadly to your brand. But thoughtless discounting is. If you customize the discount in a way that looks well-thought out and even exclusive - not desperate - your brand desirability may even increase.

In addition, as Killian Branding points out, if you have to do a discount, "avoid getting into the cycle of frequent deep discounts" and "if you are in it, get out." It's one thing to generate excitement with a promo. It's another to live your life waving people down from the clearance aisle.