06 Nov 2015

Devarsh Desai

Opportunities & Costs in the World of Offers, Discounts and Coupons

The other day, I just checked my phone balance. Although it was enough to last at least a week, the cautious person that I am, I wanted to add some money for buffer. So, I logged in to my usual recharge portal and most importantly I checked for any offers or discounts available. I spent about fifteen minutes sifting through sites and trying various coupons, but none seemed to work. While I was at it, I simply bumped into an offer on recharge on a rival site, on which I didn’t have an account. So what did I do? Yeah, you guessed it right! I spent another five minutes creating an account and used the offer!!
Now, take a step back and understand this apparently disloyal behavior. The amount I saved was a meagre 20 rupees, an amount I will not think twice before spending on a Panipuri. Yet I spent 30 minutes searching for the best deal. There were two things on my mind: the feeling of satisfaction that I get when I avail a discount and the feeling of not being cheated by paying more for the same product or service.
And now that I think of reasons why I started behaving like this, the answer is clear; traditionally, we have been brought up by mothers who bargain on small amounts while buying vegetables, and fathers who look for discounts and sales before purchasing shoes or clothes. Even as kids, we were lured to buying Lays and Boomer more because of the Tazo and Tattoo that came with it, for ‘free’! Exactly this Indian behaviour has been noticed by e- commerce sites, and  that is the secret behind the never-ending End of Season Sales.

It is the long exposure to the deals that are so freely available; marketing tactics used by ecommerce companies, banks and many more institutes, be it for customer onboarding or retention, that birthed such behaviour of taking great pains to search for deals before any purchase. The companies use it as a means to track the sources of incoming traffic in both an online and offline scenario. It also opens gates to a plethora of analytics and consumer behavior sciences, which can be used later to customize, as much as possible, the product and service for the one individual customer: the dream scenario of any marketing team, given that costs are not an issue.
However, this comes with a slight twist: while the offers are great, it changes the consumer mindset and expectations. Just as it did to me!
Consumers then begin expecting discounts, and if they aren’t available they are not exactly ‘happy’ to get the product. Also at times, they actually wait for the sale to take place, before making a purchase. Further, using a rewards program to ensure customer loyalty or acquisition does yield great results but also requires huge marketing dollars and at times, deep pockets. But this is usually short lived. In the longer run the firm has to take a step to curb such promotions, in order to sustain profitability.
And if there is little product differentiation (just as in eCommerce) and switching cost is low (in my case, I made the switch, even if it is considered costly!) the firm will eventually lose the customer to a competitor with deeper pockets. Also, trying to revert the evolved consumer mindset to a primitive stage of buying products at the display price, without discounts, may prove futile.

However, another classical scenario will be to have markups on all products and services, and let the knowledged ones take the discount and the benefits of it; while the not-so-knowledged guys suffer. This will require a cartel to be formed, just like Coke and Pepsi, both having a mutual understanding to keep margins high. Any deviation from the subtle agreement will lead the scenario to collapse. The markup-and-discount scenario is tougher to maintain in a market where there are a lot of players. The story of all airlines cutting prices and eventually bleeding to near extinction, is a great example of such a deviation. And since eCommerce companies are also a lot in number, the cartel scenario seems difficult as well.
So what can an individual like you and me, do at best? I would suggest jumping the tide and availing all those offers, coupons and discounts that exist, while they do exist. Do not let yourself feel cheated and pay a premium for the same product that your friend got a heavy discount on! Ya, sometimes, they do run into thousands of rupees. Is it too much of a task, hunting for offers? Initially, yes. You may have to visit a few sites, compare offers from different places, do some research; but when you get a hang of it, it’s just like driving a car! There are also several products like CouponDunia, GoPaisa and Offo that you can use for your refined searches. And yeah, do not leave out the smaller offers as well! Remember, it’s the small drops that together make the ocean.
So go ahead, find the best deals out there, to eventually ‘earn’ yourself that extra plate of Panipuri! And do not forget to ask for the extra Papdi at the end!!

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