, Australia

What QSR's must know in offering discounts

And are they really effective?

Numerous deals have been popping out of the menus of different restaurants nowadays to help entice consumers to enjoy a brand’s quality product at a lesser and more affordable price. QSR’s have been creatively coming up with different discount offerings, such as group meal deals and 2-for-1 options, to provide a new avenue to promote the brand and attract more customers to head on to their stores.

With all these deals being launched, one will tend to wonder how effective is discounting really in a brand’s marketing and promotion. Based on our interview with four industry and marketing experts, all believe that discounting can be very effective, given that it is done for the right reasons, at the right time, and most especially, in the right way.

Why will it be offered?

“Discounting can be very effective to create brand awareness. Customers are always looking for ‘value’ and how they can stretch the dollar,” explained Merrill Pereyra, former Managing Director at Healthy Habits and current Mentor at Start Up & Emerging Ventures.

Offering discounts is a way to turn heads, and raise product awareness in the market. By presenting a good deal, the consumers’ interest can instantly be captured, and persuade them to enter the store to try the product.

“It is not about competing, it is about promoting, and promoting either a product that is not moving as well as it should but has margin, or promoting a strong selling line that you know will get the customers attention. And then when they are in the door you have the opportunity to upsell with other products,” said Steve Hansen, founder of Chooks Fresh & Tasty now under Quick Service Restaurant Holdings (QSRH), and current King of Strategy at Think DONE Management Consultancy.

When is the right time?

Timing plays an essential role in launching a new discount deal in the market. A brand must keep in mind that along with the introduction of discounts, just like any thing new being introduced, can result in different perceptions from its consumers.

“Discounting a brand in its very early stages, where there may not be a real brand reference point for the consumer, could be very dangerous. It shows a sign of weakness in the brand, a compromised perception of quality (what's wrong with it?). On the other hand, an established brand that offers discounting as perhaps a tool to reward loyal customers could be seen as a positive. There is a sense of credibility and integrity in rewarding customer loyalty. This example of discounting could definitely be seen as having a positive effect on a brand,” said Costa Anastasiadis, co-founder of Crust Gourmet Group and current Director of ENA Hospitality Group.

Is it a good strategy?

Armina Soemino, Emerging Companies Equities Research Analyst at J.P. Morgan, believes, “the key is to ensure that there is a disconnect between the discounting and the brand itself i.e. you don’t necessarily want your brand to be known as a ‘cheap’ brand, you want to be known for ‘value’.”

Creating innovative discount deals can be very effective in promoting a brand and raising product awareness to the public. Offering these deals can pave way to strengthen a brand’s integrity and gain customer loyalty, as long as the brand is able to properly balance its products’ quality with the new discounted price.

 

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