Steep Discounts – A Double-Edged Sword for Brands in Vietnam?
The Current State of Steep Discounts in Vietnam
In today’s competitive e-commerce landscape, discounts have become a powerful tool for brands to attract customers and drive sales. However, does excessive discounting truly create sustainable value for a brand? In Vietnam, discounting to stimulate purchases is no longer a novel approach, especially within fashion, beauty and electronics. Here, we examine a few cases highlighting the downsides of over-relying on discounts to maintain sales and customer appeal.
1. Fashion and Accessories – The Industry Most Pressured by Discounts
Many renowned fashion brands, particularly those offering shoes and handbags, frequently launch discount campaigns to attract shoppers. Yet, continuous discounting can erode the “premium” image these brands have worked to build.
According to a Kantar report, 68% of consumers wait for promotional events to shop instead of purchasing at full price, making it difficult for brands to secure stable profits from listed prices.
2. Cosmetics and Skincare – Frequent Promotions Undermine Brand Image
Several beauty and skincare retailers offering discounts ranging from 30% to 50% during holidays have triggered a “sale-hunting” frenzy in the cosmetics retail industry. This has conditioned consumers to expect discounts and avoid purchasing at full price.
According to Nielsen, 72% of customers shopping at these chains tend to wait for sales rather than making regular purchases. This has made it difficult for beauty brands to maintain product value and their initial pricing strategy.
3. Electronics and Appliances – Intense Competition Diminishes Product Value
Similarly, major electronics and appliance distributors in Vietnam and abroad regularly run large promotions to stay competitive. However, this has had a downside: consumers now view electronics as “negotiable” items. According to BMI Research, prolonged discounting has diminished consumer trust in the original product value, forcing electronics brands to repeatedly discount to retain buyers.
Overall, frequent and aggressive discounting across fashion, beauty, and electronics may boost short-term sales but complicates efforts to rebuild product value and customer trust.
What Do Leading Experts Say About This Issue?
1. Philip Kotler – the “Father of Modern Marketing” asserts that discounting should be a last resort in marketing strategies, as it can make customers expect ongoing low prices and foster future discount expectations.
2. Howard Schultz – Former CEO of Starbucks, believes that discounts can cheapen brand value and that restoring customer trust later is challenging.
3. Warren Buffett – Billionaire investor, famously states that “value comes with quality.” For brands he invests in, such as Coca-Cola and Apple, Buffett views brand value as a major competitive advantage rather than relying on discounting to drive sales.
4. Insights from Strategy Consulting Firms: Leading consulting firms like McKinsey and BCG have published reports showing that excessive discounting can negatively impact profitability and brand image.
D4E Media’s Perspective on the Discount Race
From D4E Media’s viewpoint, discounting is a double-edged sword. While promotions are attractive for demand generation, overuse can lead to a loss of customer loyalty as shoppers begin “deal hunting” rather than valuing the product itself. This is especially relevant in consumer goods, where brand value is paramount. When brands discount excessively, customers may perceive the products as losing their appeal, viewing them as less of an investment in quality or prestige.
Discounts should be implemented thoughtfully, only during special occasions or targeted campaigns. Brands can focus on alternative strategies to increase sales without directly cutting prices, such as loyalty programs, exclusive VIP offers, or added value through customer service and bundled gifts. This approach not only preserves brand value but also strengthens long-term customer loyalty.
D4E Media’s Recommendations for an Effective Discount Strategy
D4E Media advises brands to focus on building more sustainable strategies by adding long-term value to products and enhancing user experiences across e-commerce platforms.
1. Build Customer Experience: Instead of constantly discounting, brands should invest in customer experience, including optimizing websites/apps, enhancing customer service, and ensuring fast delivery. This not only retains customers but also makes them feel valued.
2. Loyalty Programs: Rather than blanket discounts, brands can create loyalty programs like points systems, gifts, or exclusive benefits. This encourages repeat purchases without reducing product value.
3. Communicate Brand Value Through Content: D4E Media suggests content that emphasizes quality, origin, and additional product values, helping customers understand differentiation beyond discounts as a purchase incentive.
In summary, while discounting can drive short-term growth, overuse erodes product value and complicates customer loyalty efforts. Rather than relying solely on discounting, brands should focus on customer experience, product value, and sustainable factors to maintain lasting appeal and competitive positioning.
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