'Everything must go!'

2008-09-01 11:33

Chris Moerdyk

Is it just me or is there anyone else who feels ripped off every time there's a sale advertising huge discounts?

Like a jewellery store with big posters in the windows promoting 70% discounts. Am I the only person who doesn't so much see the bargain on offer but rather how much I would have had to pay just a few days before the sale? And to wonder how they can afford to knock so much off the price? I can't believe that all these sales mean that the retailer is taking a knock.

Then, last week I saw a Makro ad for a Cadac gas braai - you know one of those fancy jobs that looks like a cross between a Boeing 747 Dashboard and Koeberg - and it was being offered at exactly half of its R3 999 normal price.

I can tell you I would have been as mad as as snake if two weeks ago I'd gone and bought one of these things at the full price.

And there is no way a company such as Makro would be making a loss on this sort of item - if they couldn't sell the thing I would imagine they'd tell Cadac to take it back.

Bad marketing

I must admit that I am entirely unjustified in feeling that I am being ripped off. Because there is no law in this country preventing retailers from charging what they like for products. If Makro wanted to charge a million bucks for that braai they could do so quite legally. They wouldn't sell any but they wouldn't be breaking the law.

But, from a marketing point of view, if I were Cadac I would be pretty darn annoyed that the reputation of my brand was being so radically cheapened.

And what about those massive jewellery store discounts? While I guess one shouldn't really buy jewellery as an investment a lot of people like to know that if the proverbial hits the fan at least one could flog the family jewels to keep the kids fed and clothed. So, it sort of hurts when you see that investment effectively chopped by half and more.

Interestingly this is the very reason you very rarely see the motor industry in this country offering new cars at a discount. Sure, you will see reduced finance charged, free petrol for a year and all sorts of added value accessories being handed out for free, but you will hardly ever see a car openly being discounted. You can probably strike a good discount detail with a retailer but you won't see them making that public.

Destroying value

Because nothing annoys customers more than having to shell out half a million rand for a new car and the following week seeing the same thing going for R50 000 less.

And of course there is nothing like a discount to destroy resale value. Because when cars are discounted the resale value is based on the discounted value and not the list price which means that when you come to trade it is after three years or so you get a lot less than you thought.

So, I wonder if I am alone in feeling resentful and ripped off when I see these huge discounts. If I am then retailers and manufacturers in South Africa can rest easy about their brand reputations and their profit margins.

But if I am not, then they really need to start worrying because there will be a lot of us that simply won't do business with people who can arrogantly afford to lop 70% off their prices and hack the price of a Cadac gas braai in half.

The point is life is about perception and not reality. And in marketing the perception that a brand has been devalued or that a shop is ripping you off even if it isn't, can be hugely damaging.

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