Acquiring new customers with aggressive discounts will not only affect the revenue and profitability of the firm, it also make customers accustomed to cheap prices and they subconsciously perceive the product/service as the lower end.
Once they perceive the product/service as low price/low end, it is very difficult to change it. Most marketers who tried to change the perception of the customers often fail.
Solutions;
– Identify a niche market and craft a differentiated /unique product proposition for it. Even if the market size is less, you can reach them cost effectively and sell at a better price.
– You can also consider acquiring customers on a freemium model (offer them a small service of yours for free at the front end) and start selling your products/services at the back-end.
– Offer discounts only to your existing customers (because there is literally no cost for acquisition when you sell to them – you can pass on that benefit to them). They will also be happy and do more business with you. This will positively impact the revenue and profitability.
– Ensure your advertising harp more on value / benefits and quality than discount.
– Play the value game than the volume game so that the financial health of the company remains strong.
Rajesh Srinivasan
