customer perceptions towards discounted products

Topics: Marketing, Brand, Brand management Pages: 6 (1854 words) Published: February 24, 2014
Study of consumer perceptions towards discount offers

Abstract
This research study examined consumers' perceptions of products they purchased under discount offers, and their effects on repurchase intentions of the same products after the end of the offers. The research began with an exploratory study of marketers' observations of the effectiveness of consumer discount programs, and consumers' opinions regarding the products. The findings of this exploratory research were used to develop hypotheses and survey instrument. A consumer survey was carried out to empirically test the effectiveness of discount offers on three perceptual dimensions viz. quality, price and fun; and the impact of these perceptions on repurchase intentions. The research revealed that consumers perceived that they receive quality and price benefits but not hedonic benefits from the products purchased under product and prize based discount offers. The discount offers neither encouraged repurchase intentions nor substantial short term brand switching. Offering a gift attached to the product appeared to reward loyal consumers only. These findings have implications for marketers' decisions to offer consumer discounts.

Key Words
Consumers' perception, customers' loyalty, non-price discount offers, repurchase intention

1. Introduction
Growing competition has forced marketing practitioners to constantly evolve and reinvent their practices around the world. One of the popular marketing tactics has been the increasing use of different types of raffles and free schemes aimed at brand building. These practices are consumer discounts which consist of a collection of incentive tools, mostly short term, designed to stimulate the purchase of particular products or services by consumers. This study investigated whether the discount programs really contribute to brand building, purchase and repurchase intentions in India. Marketers have different views on the long term effectiveness of these consumer discount programs. Some marketers opine that the programs are effective in generating additional sales and in building brand; and others do not agree with this version. Despite divergent views, most Indian consumer goods companies including multi-national companies have employed Such discount approaches. There has been an explosion of "copycat" tactics in discount in almost all product categories. Such practices have created an environment of self-imposed margin pressures. The money spent on these promotions especially in case of Fast Moving Consumer Goods (FMCG), is passed on to consumer. This study, which examines the effects of the discount tactics on consumers' perceptions and repurchase intentions, is therefore potentially important for effective marketing decision making. Research in other countries indicates that discounts induce trial purchases but they neither turn new customers into loyal users nor convince loyal customers to abandon their preferred brand. Consequently, such promotions do not result in a permanent market gain. Discounts with their incessant discounts, coupons, deals, and premia devalue the product in the buyers' minds leading them to buy those products only when they go on sale. However, packaged goods companies feel compelled to make these offers and to blame the heavy use of discounts for decreasing brand loyalty, increasing consumer price sensitivity, and diluting brand quality image. There are no available studies on the contributions of discounts on trial purchases, quality perceptions, price sensitivity, brand image, brand loyalty and market gains in India. The current research explored whether discounts in India induced trial purchases or long term market gains, and identified the underlying reasons for consumers' responses.

Objectives of the Study
This research tried to answer the following questions:
= What are the popular discount offers in India?
= What are consumers' perceptions of discount offers in India? = What...
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