Why do we discount?
We’re competing for limited attention so we evoke scarcity to stir those who would otherwise not pay attention into consideration.
We’re competing for limited budgets so we lower prices to attract those who would otherwise not buy due to price, because they make purchasing decisions on price, and we want them off the sidelines.
We’re competing with alternatives so ultimately we want to take sales and market share away from competitors.
When you have a big unresponsive list, having a lot of people on the sidelines can lead to a discount strategy being appealing.
What’s required to turn the 95,000 people on our list into new users?
Discounts do get consideration.
But is being unable to measure the cost of that consideration worth it?
Another key dimension for discounting related to competition is comparability.
Without an ability to compare two things, people can’t make confident purchasing decisions quickly.
When consumers have to choose between two similar products, a tightly tuned discount strategy around different market segments can win the day over an over, get consumers to try a new brand, or ultimately help with the incremental growth big companies “need.”
But that only holds up when there are clear alternatives, as in consumer goods.
We’re selling information.