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In-depth: Why do brands come up with digital-centric sales and discounts during occasions?

With the pandemic giving a boost to digital mediums, brands are tactically strategising by running promotions, discounts and sale offers during occasions for attaining brand objectives

The pandemic has changed the way brands approach their target consumer, be it through their retail stores, websites or e-commerce portals. An array of tactical promotional techniques like the ‘Big Billion Sale’, ‘End Of Season Sale’, ‘Buy One Get One’, amongst many other discounts and sale offers are included by brands in their marketing mix.

While the objective of each campaign differs, what remains a constant is the brand building process, which at times is clubbed with customer acquisition, driving traffic to website, boosting online purchases and adding a recall factor to the indulgent brand experience for the consumers.

Nisha Sampath

According to Nisha Sampath, Brand Consultant and Managing Partner at Bright Angles Consulting, “Indians, especially the middle-class families, have always been more focused on the touch-and-feel approach and the indulgent experience of going out when it comes to purchasing products. But with the pandemic things have changed massively and the product purchases have shifted to online mediums.”

Upon being questioned about from where the concept of giving discounts and sale offers on digital platforms finds its roots in the post-pandemic world, Sampath stated, “One of the major troubles that comes with online purchases is that it is very transactional and it’s very hard to give an experiential dimension to it in terms of the touch-and-feel of the product and then add it to the shopping cart. Also, when consumers buy products online, there is always a doubt-factor and when brands roll out such discounts and sales as a promotional tactic, they tend to entice the consumer for online purchases and overcome the barrier.”

As per Sampath, there are mainly two reasons as to why brands take the discount and sale route for occasion or festive-centric promotions. “One of the reasons is that brands are eyeing a larger chunk of product sales during the festive season, since consumers tend to spend a big from their wallets. The other reason for this is that brands don’t tend to spend during the slump season, so to address their consumers and to gain a side benefit of customer acquisition, adding consumers to their database and to enrol consumers in their loyalty programs, brands roll out such promotional schemes,” she said.

Antara Kundu

According to Antara Kundu, General Manager- Brand Relation, Marketing and Customer Acquisition, The Body Shop, “Digital marketing has led to a push-and-pull on two ends. On one hand, the reality is there is no escaping the fact that the cost of consumer acquisition has escalated manifold owing to the platform algorithms and the way ads are served to audiences. The other is that discounting and promotions have to be used tactically, because if we give our products at discounted price all the time, then it doesn’t really have any value for the consumer.”

Kundu went on to add, “When it comes to discounting, it is mainly about ensuring that how do we as a brand retain our share in the baskets of our consumers. But ultimately it is a bet on picking the marketing mix, be it in terms of investing in the right content or on the right influencer, knowing that the cost of consumer acquisition is on the rise. It is about balancing both the marketing cost and the profitability of the campaign, based on our business objective of the month.”

Commenting on why The Body Shop rolled out a promotional offer on even the newly launched Edelweiss products, Antara Kundu said, “Generally we don’t offer discounts on new products and ranges. But right now, you see the ‘Buy 4 Get 20% Off’ offer because Raksha Bandhan is around the corner and since we are a big gifting destination, it becomes a driving factor for us to not only focus on our products and gifting combinations but on our pricing as well.”

“But the sale offer is not just specific to our Edelweiss range and is a tactical promotional scheme which is a store-wide value driver for transactions that helps us in riding on the bandwagon of consumers stocking up on certain essential products,” she clarified.

Kundu also asserted that when it comes to discounting, the call is always on incremental sales versus the revenue loss. Furthermore, she also said, “There is a significant uptick of at least 20% when the discounts and sale are run across our platforms because we only have two sales a year, so we plan to offer real value to customers at that point of time.”

Lloyd Mathias

As per Lloyd Mathias, Business Strategist and a former Marketing Head at HP Asia, Motorola and PepsiCo, “Over the course of the pandemic, the digital marketing spends for several brands have overshot traditional mediums because they are sharper and better measured with the boom in performance marketing. Many brands want to measure impact by sales attribution and therefore the discount coupons and special offers are gaining traction.”

“Marketers and brands are keen to drive effectiveness and the biggest measure of effectiveness is closing a sale. Discounts and sales are best used tactically to drive volumes in a low seasonality period and need to be used judiciously, sporadically and not routinely, as consumers will stop buying the product without the offer over time, which will reduce the operating margins of the brands,” said Mathias.

Mathias also added that brands sometimes use strategically planned tactical promotions to drive trials and to gain disproportionate market share and faster growth.

Chandana Agarwal

Striking a similar note on how digital marketing has led brands to stronger avenues where they can afford to lose out some of the revenue when they roll out discounts, Chandana Agarwal, President- North, 82point5 Communications stated, “Today, most marketers realise that they need to have strong brand equity to be able to make a business impact through offering sales or discounts. As a result, the digital marketing trends have changed in the last couple of years and have expanded further from lead generation.”

“Occasion-specific sales offer is not a western concept and India has been doing this for the longest time in the non-digital environment, be it a sale on jewellery on Akshaya Tritiya or discounts on vehicle purchase on Dhanteras. But, in the digital segment, these sales and discounts tend to defer the consumer from purchasing the products while they are new and wait for purchasing the product during the sales period as they bring out the deal grabber in all consumers,” added Agarwal.

Agarwal also went ahead to clarify the air around brands and their sales promotion techniques when she said, “The entire concept of sales promotion is a bottom of the funnel conversation as the reach and conversions would be very high, since people come to the brands with an intention of purchasing their products. That in no way can be taken as a surrogate for brand affinity.”

Prashant Challapalli

According to Prashant Challapalli, Founder and CEO, Gravity Integrated, “In India, sales were primarily FMCG-led before Fashion Retail came of age. Even if you consider coupons online, they are mostly given by funded start-ups to get consumers. Consumers consequently don’t have loyalty today and keep flipping between brands based on the coupons.”

Speaking on why do brands come up with discounts and sales promotions, Challapalli pointed out, “Occasion-specific sales are mostly a fashion retail concept. First Shoppers Stop had started it, but the one thing that probably everyone looks forward to is ‘Super Saturday’ by Jack & Jones, Vero Moda and Only, which was a tremendous ‘70% off’. Effectively, what a sale like this does is that it helps the brand off-load old stock, but with the power of social media, it also creates a huge sense of FOMO along with the creation of a massive engagement for the brand.”

Replying to a question on when does any brand come up with discounts and price-slashes on certain occasions, Challapalli said that it all depends on the brand equity. “In the premium segment as well, there are many well-heeled people who wait for ‘The Collective’ to go on sale. These are very well to do, well-travelled consumers but they find it cheaper and more convenient to wait for the sale than to shop at the maximum retail price when they go abroad,” he added.

Umashan Naidoo

As per Umashan Naidoo, Head- Customer and Beauty, Trent, “Our promise to the consumers is ‘first price, right price’. We have a no questions asked return policy across all platforms. We launch a new product every week and offer two big seasonal sales in a year with an anticipation of liquidating and clearing products from the old to make way for the new products. However, as fashion retailers we also have new collections, not only to inspire customers but to drive sales and ensure a larger footfall.”

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