Radhika Joshi
Aug 27, 2013

Can ‘sale’s expand consumer base of premium brands?

Harish Bijoor and Devendra Chawla offer different takes on ‘sale’ as a device to expand consumer base for premium brands and impact on regular customers. Radhika Joshi reports.

Can ‘sale’s expand consumer base of premium brands?

Harish Bijoor, brand-strategy specialist and CEO, Harish Bijoor Consults and Devendra Chawla, president, Food Bazaar, Future Group

Can ‘sale’ expand the consumer base of premium brands?

HBYes it can, but it’s not an extremely healthy thing to do. Because what happens is you tend to discount not only the price but you also tend to discount the image of the brand. So typically speaking, premium products and premium services must avoid getting into the trap of sale mentality.
DC: Yes. A sale is a form of promotion. And promotions should be such that they extend the brand’s heritage and should be in the direction of enhancing brand experience
Value matters even to a luxury consumer. The challenge for brand marketers is about how they can package value and get new consumers without diluting equity.
The era of people feeling horrified that a sale or promotion will erode the value of a brand is over. Just compare it with the best of luxury hotels – a promotion is akin to variable pricing through the year for the same five star suite. But you may not want to say ‘33 per cent off’– you might throw in an Arabian theme weekend and offer theme food, entertainment and a massage at the same price which will allow (without dropping price) to have new set of consumers experiencing the brand.

Will consumer walking in for a sale stick with the brand? What has your experience been?

HB: There are two or three ways in which this works. Firstly, a sale attacks those consumers who find it difficult to walk into certain kind of stores otherwise. Stores suddenly become accessible when they spot a ‘Sale’ banner. But in terms of repeat, it’s highly questionable because most people who walk into a sale will want to walk in once again into the store when the next sale is on. So there is a seasonal sale-buying mentality and in every city there are hordes of people who buy only during sales. The best brands come up on sale and everybody knows when it’s likely to be up on a sale. Therefore, they tend to bunch their buying during the sale occasion.

DC: Based on the brand experience, they may choose to stick with the brand or revisit the brand. In the context of premium fashion brands, there will be customers who are very discerning. They will not buy at a, let’s say, ‘End of season’ sale because they may want to buy only the latest in fashion, when new designs/styles and trends come in. For consumers who otherwise would not purchase during non-sale periods, and for whom getting the latest design as they are launched is not important, an ‘End of season’ sale is a good time to buy. And in a manner of speaking, brands can see it as  sampling/upgrading  opportunity for a new set of consumers. 

Are there any factors beyond quality that can help retain the ‘sale’ consumer?

HB: No, not really. It’s very difficult to retain the same consumer because consumers are promiscuous and since every retailer provides a different kind of sale and every retailer offers it at a different point of time. There are people who are called sale vultures. These are people who gravitate from one sale to another never mind the brand, just as long as the brand name is of an equitable pedigree. So whether the sale is at Puma or Levi’s or somewhere else, people don’t mind switching between brands of a certain stature.

DCWhen a ‘sale’ customer upgrades to buying  in non-sale periods,  he would have sampled your brand if it had been on sale. Quality, brand and product are basics, and they don’t change for a ‘sale’. What changes is the value equation that is perceived. One has to be very careful with the offer being made for a promotion/sale. It varies by category and what consumers aspire for in that category. If one is  targeting a BMW customer,  the promotion won’t be a 10 per cent off – it might be a 10-year free service offer for performance upkeep. 
How does a sale impact to regular customers?
HBRegular customers at times feel cheated. Because,  they think, “I have just picked it up on a full price and now the same item goes on a sale”.  To an extent, once you get into the sale bogie, you have to be prepared to alienate the small set of your existing regular customers.
DCMarketers have to let consumers win; the corollary to this is that consumers can’t feel cheated. Do we see existing customers of Zara walking away from the brand? No. The discerning customers know that there is a sale at the end of every season because the next set of designs and colours have to come in. They would in fact know that what is bought during a sale is what they went and purchased some months ago. So the value is different for discerning fashion conscious consumers and other consumers, even for the same brand. Most high-end fashion brands also go on ‘End of season’ sales and that doesn’t erode brand equity as that’s a industry practice where old makes way for the new and the discerning consumers understand that.
Does sale dilute the equity of luxury brands?

HB: All the time. The word sale is an anathema to a luxury brand. Because the moment something goes on a sale it means that there is a problem. And luxury brands must never communicate a problem to their consumers. 

Even for affordable luxury brands, I do believe that the moment you are in luxury, affordable luxury, premium brands or super luxury,  you should avoid the trap of getting into a sale mentality. For the luxury brand, sale is a four-letter bad word.

DC: Within luxury brands, you have brands which stand for not just quality heritage but also exclusivity. I would put the likes of Louis Vuitton and Hermes  in this category, which have never gone on sale.  But when we speak of  affordable luxury brands that are looking at a larger consumer base, they are available on sale as the season changes. The biggest of premium fashion brands  go for  a ‘End of season’ sale. A sale  promotion if done right does not erode the brand value. A brand has to find context – it could be during a Dubai Shopping Festival when everything is on sale including affordable and luxury brands, or could be a retailer’s promotion across all brands. In such cases, you are becoming accessible to a wider set of customers without hanging a ‘Sale’ sign with your brand name on it.



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