The Danger of Discounts

“All items 50% off”, “Buy one, get one FREE”, “Buy one sweater, get the second at 25% off”. We’re getting used to seeing signs like this in store windows these days. Retailers are doing whatever they can to entice customers to come in and spend their precious hoarded dollars.

They might need to get more creative, because recent Yankelovich poll reveals that discounting prices can discount the brand. Seventy percent of respondents say that when they see the price on a product deeply discounted, they think the product must have been overpriced in the first place. And 62 percent said they assumed deep discounts meant they were either trying to get rid of the overstock or that the product was out of date.

The old saying, “You get what you pay for” applies in the minds of many consumers. Sixty-four percent of those polled said that brands that didn’t discount their prices must either be extremely popular or of good value. Take designer jeans for example, women are willing to pay up to $200-300 for the must-have brand name jean that fits like a glove. But if they start seeing those jeans at a discount store or on the half price rack, they start to wonder if maybe that designer is not the must have anymore. In other words, the consumer begins to question the value of the item…..the value money wise, quality wise and popularity wise.

Another potential danger with huge discounts, is consumers will start expecting the products to be discounted more, and will wait on the discounts before buying. Starbucks used to have an Annual Brewing Sale where they would slash prices on their high-end coffeemakers and espresso machines.

Customer perception turned into “Why should I pay $250, when the real value must only be $200?” So customers stopped buying year-round and waited to buy only during the famous annual sale.

So again, rather than deep discounts, brands need to get more creative. Instead of lowering the price of that expensive coffeemaker, Starbucks should give away a free half-pound of coffee with the purchase of the coffeemaker. The key is to entice the customer without discounting the brand.

The Green Way of Life

What is it about the word “organic” written on the label of a product that makes me automatically want to buy it? For sometime, it’s been trendy to “go green”, but it seems as though now it’s going from trend to becoming a way of life for more and more people.

One would think that in the midst of a recession, people would be more concerned with “cheap”, but not the case. According to a study issued by Green Seal and EnviroMedia Social Marketing, four out of five consumers are still claiming to buy green products, and 82% of consumers are buying green despite battered economy.

Let’s face it, it’s popular to be “organic” and “sustainable”, and companies need to jump on the bandwagon that voices the environmental benefits of their products. Trendwatching.com calls it “eco-bounty”, which refers to the numerous opportunities, both short and long term, for brands that participate in the epic quest for a sustainable society. Some of these opportunities exist despite the current recession, others are fueled by it, not in the least because of new rules and regulations. Downturn-obsessed brands who lose their eco-focus will find themselves left out in the cold when the global economy starts recovering.

Even Apple is jumping on the green wagon, because it knows that most of it’s consumers are progressive, socially-minded individuals. They released the “A Greener Apple” statement to voice concerns and their stance on creating environmentally-sustainable products.

The study also claims that one in ten consumers blindly trust green product claims, so basically one in ten buys the green label because it makes them feel good. But those other nine, want to know that what they claim is actually true.

I’ll admit that all the hype surrounding the “go green” movement has seeped into my buying decisions as well. I purchase energy-saving light bulbs, shop with reusable grocery bags, recycle when I can and am often drawn to products that read “all natural, organic or sustainable”.

There is a lot of opportunity for companies to leverage the environmental benefits of their products to their consumers, because the more people hear about the importance of sustainability, the more they are going to live that way.

The G Trend

Over the past year, we have watched our economy going deeper and deeper into recession, with a lot of the blame being placed on one thing, GREED.

Through this a marketing trend has emerged-the G Trend. Consumers, or Generation G, are looking for the exact opposite of greed, which would be Generosity and Giving. Trendwatching.com defines this Generation G as this:

"Captures the growing importance of 'generosity' as a leading societal and business mindset. As consumers are disgusted with greed and its current dire consequences for the economy—and while that same upheaval has them longing more than ever for institutions that care—the need for more generosity beautifully coincides with the ongoing (and pre-recession) emergence of an online-fueled culture of individuals who share, give, engage, create and collaborate in large numbers.

In fact, for many, sharing a passion and receiving recognition have replaced 'taking' as the new status symbol. Businesses should follow this societal/behavioral shift, however much it may oppose their decades-old devotion to me, myself and I.”

The G trend was what sealed the deal for President Obama getting elected back in November. He positioned himself as “one of us”, and regardless of your political beliefs, you have to admit he did a great job in his campaign of relating to the workingman. In the wake of the financial meltdown, people were not only ready for change, but also longing for someone who truly cares for others and has our best interest in mind.

The G trend is also why cause marketing has become such a buzz term. People have become more passionate about making a difference in issues they believe in, and they want the world to know about it. That’s why the Livestrong and the RED campaign have both been so successful. It’s fashionable to be generous.

To become more favorable to the consumer, companies need to get in touch with their sweet side. Playing nice is the name of the game. Being nice to not just the consumer, but nice to their employees, the earth, the community…you get the idea.

Understanding Trends to Help Build Concepts

Uncovering the "trends" is almost as hot a topic as "consumer insights." 

Mixing current trends with consumer insights, and developing something meaningful as a result is a bit like painting a Van Gogh--it's only considered a masterpiece long after the fact.

Keep it real when trying to uncover the truth in qualitative research!  Trends only matter when it's relevant to consumers.  The basic, foundational level of any good "new idea" is still the same, as I've shown here graphically.  The primary difference with many of today's consumer groups is that it gives us as marketers more context from which to paint...