By Chuks Ogbekile
Discount has been defined as a deduction from the original price of something. This suggests that the seller sells at a price lower than what he or she intends to sell the product or service initially either due to fear of competition impact or some other price-discriminatory factors. These price discriminatory factors could include consideration due to quantity purchased per time, circumstances surrounding the buyer among others.
We have all at one time or the other asked for a discount. While this plea could come for several reasons, chief among them is a mere exercise of bargaining power in the face of the budget constraints. Outside the more structured distribution settings where prices are fixed, an average buyer believer he/she could have gotten products and services purchased cheaper. Hence, the need to push further to save some money. This request for a discount may not come directly, it may come in for of price objection.
Then an average Salesperson becomes jittery that competition may snatch this opportunity. Hence, he/she falls for the discount pranks. The buyer could push further by, particularly if acquainted with good negotiation skills, telling the seller things like ‘we have been buying it here for a price lower than what you are offering’ or ‘we intend buying more soonest in view of our expansion plans’. This persuasive negotiation skills could incite the seller into going for approval or rethink the price, either to the extent of losing a good chunk of the profit margin or even undermining the cost.
While this is the reality on the ground in the market today, it behoves the seller too, especially the Brand Managers to be careful in living on the fallacy that says you sell more when you are cheap. Buyers don’t always buy because it is the cheapest. Producers and service providers who hold this view often underprice their products or services. A value-laden product or service endears your Brand to the heart of a potential buyer than the cheap alternatives that fail to connect with the heart or need of the potential buyers. The Salespersons and other Front Desk Reps should so connect the values of their products and services to the hearts os potential buyers to the point of making them convinced they can’t succeed without this Brand. Market Research Units and the Sales Team should synergize to come up with products and services that guarantee the greatest mind-share of the potential buyer. Some services providers have so reduced their prices that the only thing holding the sales is the buyers doubt in the genuineness of the solution or its ability to deliver. Where the potential customer have no time or other resources to experiment, they follow their instinct and eventually go for the ones we see as “very expensive”. The implication is that your Brand is rejected in the comity of Brands due to excessive discounting of your prices. Many market leaders are not there because they are cheaper. Price objection is one you can handle without reducing your prices.
Look out for my piece on Handling Objections.
*Ogbekile is an entrepreneur, entrepreneurial life coach and public speaker.