Paying less for goods, services may cost more in the long run
As the recession drags on and money and job security are concerns, it鈥檚 not surprising that consumers continue to wait for sales before making a purchase.
In the short-run, the consumer "wins" -- purchasing the item for less. But at what cost?
鈥淲hen a brand goes on sale, it gives away part of the profit margin needed to invest in future innovation and quality,鈥� says Sheri Bridges, associate professor of business at Wake Forest University and expert in branding and consumer behavior. 鈥淭his affects the consumer鈥檚 satisfaction in the long run because the company cannot afford to develop the newer and better products we all want.鈥�
In fact, says Bridges, firms that keep giving away margin will eventually have to reduce the quality of their goods and services.
鈥淭oo many brands think the only way to get and keep customers is by cutting prices. In reality, consumers are more interested in high value than low prices. Value is a function of the bundle of perceived benefits offered at a given price. Apple doesn鈥檛 discount its products, but it鈥檚 still one of the hottest electronics brands around.鈥�
Continual price-cutting conditions consumers to wait for sales before making purchases and sends a message that, in the company鈥檚 eyes, the brand is not worth full price.
鈥淪elling products at a discount is like paying someone to like you,鈥� Bridges says. 鈥淕ood marketers know that sales aren鈥檛 necessary, if you鈥檙e providing the right value to the right customer.鈥�
Provided by Wake Forest University
