According to wikipedia, discounts have been used as a marketing technique since the late 1800’s. Traditionally, a buyer is given an incentive to make a purchase in the form of a temporary price reduction. The fact that the price reduction is temporary is exactly what gives the buyer the added motivation to make the purchase rather than wait to make the purchase later. But what if the discount is not a temporary price reduction, but rather a never-ending mark-down from the original price. Would consumers notice? Would they care?
One product that seems to be using this new technique of offering a perpetual discount is Invicta Watches. A rudimentary search on Amazon shows that these watches are listed at various price points starting at $195 and ranging up to $695. However, the interesting thing is that these watches are always on sale at discounted rates ranging from $50 to $100. Here are the item listings on Amazon and one daily deal listing from eBay:
So why are these watches always sold at a discount rate? Simply put, the purpose of such a marketing tactic is to create the appearance of perceived value. When a consumer is comparing two similar products to purchase, they will typically compare various attributes such as features included, quality, aesthetics, brand recognition, many others, and last but certainly not least price. If you’re looking at two watches, watch A and watch B which are very similar and watch A is $50 and watch B is $70, it’s a slam-dunk no brainer, you have to go with watch A. But, what if watch A has always been $50 and watch B has been marked down from $195. Then the consumer has to second guess their original conclusion and possibly give some weight to the fact that there may be some hidden value in the more expensive watch that they haven’t even realized yet!
The only down side of always selling at a discount is that your credibility as a product could take a hit if consumers notice that you are using this marketing ploy. But if you are a business where the majority of your customers are first time customers and are not likely to be repeat customers, then this doesn’t hurt you as much.
[As a disclaimer, the reader may be wondering how the conclusion of a perpetual discount could be made simply with one day’s worth of data. The conclusions shared in this blog post are a result of noticing these pricing trends day-in and day-out over several years. If you’re still in doubt, do some Amazon, eBay, and Google searches for Invicta and you will be hard-pressed to find any site selling these watches at their full price.]