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.

DISCOUNTS, DISCOUNTS, DISCOUNTS - It is raining discounts

Types of discounts: Discounts are reductions on basic price of goods or services. Discounts are disliked by companies but are routinely offered as they garner quick sale for the company. In the times of recession it is very common to see companies offering price discounts on their products. Many companies offer genuine discounts. A genuine discount is one where the company consciously reduces its margin and offers a deal to the customers. In the modern world customers are very business savvy and can catch on to a genuine offer very quickly. Let us see some methods of discounting that are unethical or downright sleight of the hand.

1.     Upto 60% off discounts: One of the most popular discounting methods. Up to 60% off means that the discount varies from product to product and the item that is offered to at 60% off will be a low priced product like a handkerchief. Even that handkerchief would not be available. Most of the other products sold would be available at a marginal discount of 10% to 15%.

    2.  Buy one and get 12 off discounts: This is an amazing offer. Buy one shirt and get 12 shirts free. Wait there is a catch. The MRP of shirt number one on offer is Rs 4,550/- . 1+12 = 13. 4,550 divided by 13 is Rs 350/-. Thus the cost of each shirt is Rs 350/-.

3.    Mark up and offer discounts: One of the favorite tricks of the retailers. MRP (Maximum Retail Price) is a tool that comes in handy. The shop keeper will mark up the cost of the product and offer the same as discount. For example a shirt’s MRP is Rs 500/-. It would be marked upto Rs 750/-. The shop keeper would offer a discount of 20%. 20% of Rs 750/- works out to Rs. 150/-. Even after giving a discount of 20% the cost of the shirt would come upto Rs 600/-. That is a extra profit of Rs 100/- on the earlier price of Rs 500/-.

Dealing with discounts - The Network Experience

Ask any salesman as to what is the most difficult thing to handle in a sales process he would promptly say objections. The best sales professionals are of the opinion that objections are curtains behind which opportunities for a sale are hiding, waiting to pop out. Open the curtain and the sale will pop out.

The one issue that crops up very frequently is discounts. Discounts are reductions on basic price of goods or services. Customers love discounts. Discounts offered by the salesman are not as attractive as those that are forcefully wrung out from the salesman.

So how to deal with discount? Let me cite an example from the company where I worked “Indian communications Network Limited”. Let us take the case of Pavan the salesman. Pavan has almost closed an order. Then comes the dreaded question “how much discount can you offer?” Pavan argues that the company does not offer any discount. But to no avail.  The customer wrings out 5% discount from the desperate for an order Pavan.

The customer is not satisfied. He tasted blood and wants more. He demands that Pavan offer him more discount. Pavan refuses. At this juncture the customer demands that he be allowed to meet Pavan’s boss. Pavan boss is the ASM (Area Sales Manager).

The customer meets the ASM and pulls the same stunt “How much more discount can you give?” This is where the ASM has to play the cards close to his chest. If he says no the sale might be lost. If the ASM is willing to negotiate more discount Pavan’s credibility as a salesman will be lost.

The ASM looks at the customer straight in the eye and says “We as a company have a policy not to offer any discount. Has Pavan offered you any discount?” The customer would be forced to accept that Pavan did offer him 5% discount. The ASM is shocked “Pavan should not have offered you the discount. I am afraid that we will have to reconsider the order”. The ASM is playing a very subtle mind game. In 9 out of 10 cases the customer is sold on the idea of the product and he would back track. The customer would plead with the ASM to let the 5% discount stay and retreat back to Pavan.

The ASM has delivered a very nice lesson of accountability and credibility to the customer. If more discount is given Pavan would carry less weight with the customer. By not offering any further discount and by saying that even 5% discount is not allowed the ASM is making the salesman have more value in the eyes of the customer. The customer would maintain healthy relationship and do business only with Pavan and not with the ASM. Any professional ASM would like the same – that the customer maintains a good relationship with the Salesman servicing the client or the territory. 

The art of observation - learnings from Animal behaviour

The mother of all education is observation. I have learnt so much in life from observation. One of my favorite books is "How to read a person like a book". Let us discuss animal behavior especially dog behavior and what we can learn from it. 

Dogs gulp their food: This is a tendency that they have retained from their wild days. In the wild dogs are pack animals and they hunt and eat in groups. It is very important that a dog eats and eats fast. The dog that shows table manners by eating slowly will starve itself to death. Speed matters in eating if you are a dog. 

Dogs circle the place where they sleep many times before they settle in: Again a throwback to their wild days in the forest. In the forest dogs have to sleep on grass. The grass might be thorny, tall or might have unwelcome pests, small insects, bugs etc. By circling the grass gets crushed and so too all the unwelcome guests. That is why even domestic dogs circle many times before settling down. 

Dogs treat different people in the family differently: Very true. Dogs are pack animals and they tend to treat member of its family differently. The most dominating person (in many cases the father) will become the tribe leader and mother will become the feeder and the others will be the siblings. If the dog can dominate it will become the most dominant of the siblings and would dictate things to the children!

Dogs are friendly and are very social: Most well trained dogs are very friendly and can adapt to new situations very easily. A new dog in the surroundings would immediately gauze the environment and adapt. If it is possible the new dog would stiff leg (walking to the other dogs with stiff legs) and appears to be bigger than itself with raised body and fur. The dominant dog would growl. If the other dog does the same it could either led to a fight or one of the dogs will withdraw the aggressive posture thus defusing the situation.

The submissive dog would immediately tuck its tail inside its hind legs and make itself appear to be smaller and whimper. The entire posture is that of submission. If the aggressive dog were to approach the submissive dog, it would yelp and fall on the ground. It would lie flat on its back, expose its neck and look away. This  indicates total submission. The submissive dog is saying “I am totally at your mercy. Kill me if you want”. The dominant dog also has a code of conduct. The dominant dog would sniff the neck of the submissive dog and both would become friendly.  

Thus it is important to notice the play of body language in all situations including in sales and marketing. The customer might be saying something and the body might be saying something else. If there is a discrepancy of what is being said and what is being felt (through body language) the smart sales man who can detect and act on the discrepancy would emerge as the winner and walk away with the sale.

Caring for the customer - The american way

America is the Mecca of marketing. There are so many things that one can learn from the American way of marketing things. The one thing that immediately comes to the mind is the panache or the flair of presentation. Americans have a definite flair for dramatization. Right down to Donald Trump who named his hotel “Taj Mahal” and boasted that it was as good as the original Taj!

American trouser sizes: One thing that all people hate is the dreaded question that the sales person asks in a textile shop” sir what is your waist size?” Shoppers in USA are in for a pleasant surprise. The American size is one size less than normal. For example Indian size 38 would be size 36 in USA. Shopping in USA is a pleasurable experience as 2 inches are taken of your waist that too instantly! The only other place that can make you even happier is Ethiopia where one magically becomes 7 years younger (Ethiopia follows a calendar that is 7 years behind the Georgian calendar. Ethiopians are right now in 2004!)

Large, extra large: America is the country that made inches redundant by getting in a new concept called small, medium, Large and extra large. Many people console themselves saying “well we are large”. But how large, no one really bothers because after large it is all XL (extra large and one can go on till 7 XL). Bank on Americans have taken the guilt out of shopping!

Plus sizes: Fat is out but fat people are still good for business. In a country that celebrates thinness paradoxically most of the customers are fat and they have to be pampered. USA has a very polite name for fat customers. They call these customers plus size customers and there are shops catering to plus size customers’ fashion needs.

Zero size: USA worships thinness. USA has coined a term called zero size. Zero size does not mean having a waist of zero. It is 22- 24 inches at waist. But the concept of zero size becomes so popular that a winsome lass like Kareena Kapoor starved herself to get a zero size. Sanity prevailed and she has returned to her earlier and normal waist size.

Calling clients as guests: One of the things about USA is the terminology. All other countries call their customers as customers but US airlines have taught the world to call their customers as guests. Guests in the house and they must be treated as guests are treated at one’s home. Albeit many companies call customers as guests and merrily cheat and rob!

Allowing readers to read to their hearts content: American book shops have mastered the art of display and enticement. American book shops are so inviting that readers can go to the book shop pick up a book and read it to their heart’s content. There is no pressure of buying. One can sample the book and buy it only if one wants. It works to the advantage of the book shop as the book shop appears to be crowded. A crowded shop always triggers others to walk in. It is a win-win for the book shop.

Allowing readers to borrow as many books as possible: American public libraries allow members to borrow as many books as they want. There is no restriction on number of books that one can borrow. But one should be cautious about the due date. After the due date the borrowed books will be charged a dollar a week as late fee. 

Writing with a ink pen

Writing is an art that was admired by all people and by all cultures. So much so that there are phrases like well read man, man of letters etc. Phrases dealing with writing or reading what has been written. In the Telugu culture one of the celebrations is the time when the small child is fed solid food for the first time. This occasion called annnaprasana has an interesting side light. Article like money, knife, key chains and many other assorted articles are placed in front of the crawling child. The child crawls and catches any one article. The article that he catches it is said  will decide the profession that the child will chose in the future. 

Parents are very happy if the child chooses a pen as it means that he will be well read and that he might pick up a profession that has a pen in it. Pen has magical connotations for many. So such that it is said 'that pen is mightier than the sword'. 

We as children were fascinated by ink pens. It was coming of age if one writes with a pen. The ink pen had many accessories like the nip, the ink bottle, the ink re-filler etc. Schools benches had small depression in which the ink bottles could be placed. Every student was also supposed to have a blotter and was supposed to keep it close by. Ink spilled on the text book could magically spread and make the entire text book unreadable (thanks to the cheap newsprint paper used in making the cheapo and affordable text books). 

Of late writing with ink pen has become unfashionable. The cheap ball point pens have innumerable advantages. They are cheap, don’t dry if the nip is exposed to air without writing, can write faster and don not require frequent refilling. 

On the flip side writing with a ball point pen spoils the handwriting as ball point pen writers tend to write faster. Of late writing itself has become a disappearing art. We don’t pen our thoughts any longer we key our thoughts in. The usage of computers, cell phones and the usage of e-mails and SMS has made the present generations become very bad writers. 

Interestingly ink pen writing has become very fashionable. Recently In India we had limited editions pens sold at a whopping cost of over Rs 2,00,000/-. The pens had a very usual model - Mahatma Gandhi. The epitome of simplicity as a model for a high priced pen! The story of Monte Blanc the costliest pen is also worth remembering. The pen is so cherished that it becomes a family heirloom. 

Psychologically too ink pen writer tend to be a different breed. They tend to intellectual, slow thinkers (one can’t write very fast with a ink pen) and people who are decision makers. The green ink pen signer in India is held in great regards. They are the gazetted officers. Officers whose signature is highly prized. They can sign the photo copy of a certificate thus making it authentic.  That’s the power of a gazetted officer.