I am always intrigued by discounting as an immediate tool to sell more cars… All adverts highlight more on discounts/ offers and less or in many cases no product features. Do discount deserve that much of importance to overshadow product features and company’s vision? Can we do away with it or reduce it for rare occasion? Is it beneficial for customers in long run?
When brand offer discounts are they not indirectly saying that my car is overpriced. I have huge margins and I am ready to shell some to gain your attention and score immediately extra numbers? Now the hypothesis that customer gets carried away with it is flawed by the very fact that discount then becomes norm and all brands start pouring discounts. In this scenario customer again has choice on value and he chooses on factors more appealing to him. For some it may be looks, for others it may be brand and maintenance cost and yet for others safety features/ dealer network/ comfort/ electronics/ entertainment/ convenience and so on, or some combination. Also with more discounts do the overall industry numbers move upwards? One may choose not to answer but definitely it arouses thinking. The current scenario speaks volumes.
Discounts in long run erode customer’s asset value. The resale drops and gain that customer is made to perceive today is more than lost in resale value. Moreover customer is never confident of getting the best price and as such buying experience takes a hit. He is always wondering if it could have been better. The entire sales pitch get diverted to negotiations and not on experiential selling. Just imagine a customer buys a new launched car in initial launch period and after sometime there is a huge discount which just crashes his cars resale value. What was the mistake of this customer? Why is he paying the price of market experimentation or for showing his confidence in the brand/ product?
Brands too are forced to spend lot of time, energy and resources to curb rampant discounting in the market. Mad race of numbers. The amount of money spend in these checks are huge. Direct spend is on mystery shopping conducted and indirect in terms of loss of productive time by dealer and brand staff to discuss and settle unproductive issues on extra discounts.
Why can’t the product price be fixed not to have room for huge discounts? This will lead to bigger benefit as correct pre-tax price will multiply benefit to customer because of lower payment of excise, vat and other taxes. It also means at the same cost or lesser, more features can be added. Customer will get products at more reasonable price. Dealers will have to sell customer an experience to induce him into purchase and not just discount sale. This will lead to investments in training and skill development of staff. It will make our teams better and members will benefit from it for their whole life. Brands may also choose to pass on the discount budget allocation through lower parts cost leading to low cost of ownership. This will put a barrier to unscrupulous part traders and garages. Overall customer will enjoy buying, cherish ownership and will be confident of the asset value.
Having said that, I am not suggesting full no-no to discounts. Festival offers may be necessary to liven up the moods but within marginal limits. I believe that this is the single most important issue to be address for healthy wholesome growth of automobile industry. We need to accept, think and talk more about it.
When brand offer discounts are they not indirectly saying that my car is overpriced. I have huge margins and I am ready to shell some to gain your attention and score immediately extra numbers? Now the hypothesis that customer gets carried away with it is flawed by the very fact that discount then becomes norm and all brands start pouring discounts. In this scenario customer again has choice on value and he chooses on factors more appealing to him. For some it may be looks, for others it may be brand and maintenance cost and yet for others safety features/ dealer network/ comfort/ electronics/ entertainment/ convenience and so on, or some combination. Also with more discounts do the overall industry numbers move upwards? One may choose not to answer but definitely it arouses thinking. The current scenario speaks volumes.
Discounts in long run erode customer’s asset value. The resale drops and gain that customer is made to perceive today is more than lost in resale value. Moreover customer is never confident of getting the best price and as such buying experience takes a hit. He is always wondering if it could have been better. The entire sales pitch get diverted to negotiations and not on experiential selling. Just imagine a customer buys a new launched car in initial launch period and after sometime there is a huge discount which just crashes his cars resale value. What was the mistake of this customer? Why is he paying the price of market experimentation or for showing his confidence in the brand/ product?
Brands too are forced to spend lot of time, energy and resources to curb rampant discounting in the market. Mad race of numbers. The amount of money spend in these checks are huge. Direct spend is on mystery shopping conducted and indirect in terms of loss of productive time by dealer and brand staff to discuss and settle unproductive issues on extra discounts.
Why can’t the product price be fixed not to have room for huge discounts? This will lead to bigger benefit as correct pre-tax price will multiply benefit to customer because of lower payment of excise, vat and other taxes. It also means at the same cost or lesser, more features can be added. Customer will get products at more reasonable price. Dealers will have to sell customer an experience to induce him into purchase and not just discount sale. This will lead to investments in training and skill development of staff. It will make our teams better and members will benefit from it for their whole life. Brands may also choose to pass on the discount budget allocation through lower parts cost leading to low cost of ownership. This will put a barrier to unscrupulous part traders and garages. Overall customer will enjoy buying, cherish ownership and will be confident of the asset value.
Having said that, I am not suggesting full no-no to discounts. Festival offers may be necessary to liven up the moods but within marginal limits. I believe that this is the single most important issue to be address for healthy wholesome growth of automobile industry. We need to accept, think and talk more about it.