Price cutting: Brand damage a real threat

Companies that lower the prices of their products may risk damaging long-term brand perceptions because suspicious consumers assume something is wrong with the product or brand if it’s being discounted.

When asked what they assume when a brand lowers its prices during tough economic times, 70% of consumers say, “The brand is normally overpriced.” Another 62% of consumers said say ”the product is old, about to expire or about to be updated, and the company is trying to get rid of it to make room for the new stuff.”

When probed about how they view a brand that does not lower its prices during difficult economic times,  64% of consumers assume that “the product is extremely popular,” and another 64% say they assume that “the product is already good value.”

Moreover when a price is reduced, consumers delay purchase in anticipation of further price cuts. About half to 60% of respondents think that when companies lower prices, it means that prices will go down further if they wait long enough. And roughly 50-70% think that brands that do not lower prices will have to do so eventually.

Offering extra value, an associated linked product, or a multiple purchase were regarded as offering value of the brand sharing their success.

The same objective, but a different message.

Author: Roderick Morgan

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