The Problems with Discounting

Many businesses discount their prices in an attempt to pull customers to their brand(s). Coupons are the norm for many retailers. However, this promotional tool can adverse effects if used in the wrong sector of business.
In the restaurant industry many locally owned businesses discount their prices to be able to compete with restaurant chains. I do not think this is a good idea for local businesses. First, they’ll never be able to compete on price with national chains. Thus, it is not sustainable strategy. Second, people generally expect to pay more when purchasing from a local small business compared to a chain. Third, once a business starts discounting, it is hard to move away from it.

People have a limited amount of money to spend on goods and services, especially entertainment services like restaurants and bars. Within these categories, people know their options and categorize them based on how much money they will typically spend for an activity. Discounts change the price category that customers assign to a business.

The Big Deal: Marketers and business owners shouldn’t use coupons unless they’re absolutely necessary. It changes the way customers view your business. Rather than paying regular price, customers will seek out, and expect, a discount. 

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