Do discounts attract you to a store like a magnet? Is the word ‘free’ sounds like pure music to your ears? If your answer is yes, you are not alone. Many people like you throng the stores during sale season. You want the best deal for your hard-earned money. However, do sales really help you save? Your answer will mostly be yes. After all, you are paying much less for things that would otherwise cost more. Well, read below to understand the idea behind sales and what stores make out of them.
Psychology of Discounts
Deals attract everyone. Reduced pricing is a strategy that stores adapt to attract more customers. It may look like they are going out of their way to get you the latest collection at cheap prices. Or that you are the lucky one to get the last piece on discount. You must have fallen to these tactics many times. However, you must know that discounts are not a result of their large-heartedness. On the contrary, discounts are very much a part of their pricing strategy.
Think about how much you spend at your favourite store during on and off-sale seasons. A quick look at your bank records and you will realize that you have spent more during sales. This is exactly what the stores want. They want you to spend more and you end up saving less overall. Often sales tempt you into buying things that you don’t need. Discounts create a sense of urgency as there is always an end date for them. Often, you feel that you will miss out if you don’t go early.
Coupons Make You Happy
Coupons are designed to gratify you. Retail and online stores often boost their sales by giving coupons to customers. A study was conducted on the effects of redeeming coupons. Interestingly, it was observed that coupons increase the oxytocin levels and reduce stress. People get a kick in redeeming coupons and consider it better than receiving a gift. Especially, if the coupon is of a store that rarely offers discounts. So much is the excitement that customers agree to spend more in order to redeem those coupons.
Types of Discounts
1. Customer value discounts
These are the discounts designed to attract different buckets of customers to stores. It is an effective strategy to increase the footfall and win customer loyalty. For example – some stores offer a 10% discount to first- time customers. Stores offer loyalty cards so that customers can get exclusive discounts. Also, they get points on every purchase. These points can be redeemed as money after a certain threshold.
2. Product life-cycle discounts
A product may be newly launched or may have been on the shelf for a long time. Stores apply different discounting strategies at different lifecycle stages. If the product is newly launched, the discount will create more awareness about the product. If the product has been on the market for a long time, discounts will help in clearing the inventory.
3. Seasonal discounts
Customers will devalue a product if the product is on sale for a longer duration of time. To create an illusion of better value, stores prefer to offer discounts at specific times like the end of the season, Independence Day or Diwali promotions. These seasonal discounts have become so popular that people often delay their shopping and wait for these days to get a good bargain.
4. Bundle discounts
How often have you bought something because it was free with another product? Are you attracted to a deal that offers a certain percentage of discount when you buy a set number of products? Well, this is another type of discount that you will generally get on high volume items like grocery and confectionary items.
How to Save More Using Discounts
Having understood the strategy of discounts, it is fair for you to ask if discounts are any good. If used wisely, discounts can certainly help you save money. Here are a few things that you can do to maximize your savings.
• Remember that discounts are designed to make you spend you more. Make a list of things that you really need when you go shopping. Stick to that list and don’t get tempted into buying things that don’t need.
• However, for everyday items like toothpaste, soap, detergents etc. it is better to find discounts and deals. You will certainly finish such household products and end up saving money.
• Try searching the best prices online. Often online sites provide competitive prices compared to retail stores giving you the best deal.
• It can be difficult to control yourself during seasonal sales. Pamper yourself with some retail therapy but don’t go overboard. Prepare a budget for yourself and stick to it while shopping.