Brand value and danger of discounts
Building a brand consists in increase its value in the eyes of the consumer. The greater the perceived product value is, the greater is the amount of customers that are willing to pay. At the same time, it also increases customer’s loyalty to your eyes, because the product ceases to be a single object or service in order to become a defining symbol and even enriches your life.
Increasing the value of a brand is a daunting task that requires time, effort and a lot of good decisions. On the other hand, a poorly implemented strategy can quickly destroy what we have taken years to achieve.
Precisely, one of the biggest challenges that currently marks its devaluation, is because of the price war between distributors. The development of e-commerce has greatly facilitated the creation of online shops by our distributors. That is very positive as it multiplies the number of distribution channels. However, it also involves a huge risk to brand value in the medium term: the price war between distributors.
Sell more vs. enhance the brand
When selling online, the distributors are no longer linked to a geographical area in order to compete with other companies selling the same product or service.
For that reason, there will always be someone willing to reduce their margin in order to get more sales.
At the same time, in such a comparison as Internet environment, offers and discounts quickly receive greater attention and visibility.
The consequence is that after a while the price of a service or product tends to assimilate with the discounts offered by distributors and comparators and reduce the perceived value for the entire brand.
For this reason some companies have already begun to take action on the matter by monitoring the sales strategies of their distributors and implementing some rewards or benefits to those who respect pricing policies and sales, particularly for new product launches or seasons in the case of fashion. Some of those benefits ranging from better product margins to support marketing campaigns.
Obviously, moving from one strategy as “sell at any price” to a strategy to care brand value generates much friction as it is not always easy to assimilate for the actors involved. Sometimes it implies even give up one or more channels that can be generating significant sales. However, in the long run, this seems the most sensible choice for any brand not want to give up the image of reliability and quality that has taken years to build.