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January 03, 2012

Discounts, discounts and more discounts

4.  60%+40% off as discounts: This offer looks very attractive on the hoardings. It looks like 100% off. Every shoppers’ dream!. But the discount is not 100%. The second 40% is on the first 60%. That 24% extra. So the effective discount is 84% and not 100%. Similarly 30%+20% off is not 50%. Rather it is 36% discount.
5.  Cost to cost discount sale: A sentiment that buyers like very much. The advertisement proudly claims that the shop is offering the product at cost to cost basis. That means the shop is offering the product at a cost at which it is made available to the shop keeper himself. But logic says that it can’t be offered at cost basis. Even if no margin is taken the shop has to still take care of fixed expenditure like shop rent, salaries, electricity, water, interest payment and other expenses. At best the shop can offer a product at no margin basis but can’t offer it at a cost to cost basis.

6.      Export reject discount sale: Very popular in the vernacular (local language) media. The sob story of an advertisement details how a shipment was stopped at Karachi port or at Dubai port and how the consignment was returned to India. Most shoppers buy the story once. But to their surprise the same stunt is pulled many times. The shopper quickly realizes that export rejects are just a ploy to pull the gullible shoppers into the shop.

7.      Tie up sale discount: Here if one product is taken another product is offered at a discount. For example if shirts are taken for Rs1000/- rupees worth, on trousers worth Rs 1000/-, 50% discount will be offered. So the effective discount is 25%. Rs 500 on a total purchase of Rs 2000/-.

8.   Always on discount: Ploy of retailers of the likes of Coupons and Brand Factory. These shops are shoppers’ dreams come alive. These shops offer products always at a discount. The moot point is whether the customers believe that they would always get a discount or the discount becomes a part of the offering itself. A very difficult question to answer.

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