In the dynamic world of Direct-to-Consumer (D2C) startups, the quest to capture consumers’ attention and wallets has never been more challenging. Discounts being discounts have long been hailed as the golden ticket to winning consumer loyalty. It’s almost impossible to navigate the retail world without coming across a discount strategy. Buy One Get One, Bundles, Free shipping, Referrals—there is always something. And why not? 

Nearly 29% of online shoppers in India search for a discount code every time they want to buy something. Moreover, online shoppers spend considerable time searching for coupons online and the majority of them feel frustrated when they miss out on saving some money while shopping online. 

But are discounts really the magic wand they are often perceived to be?

In this blog, we’ll delve into the world of discounts. We’ll analyze the importance of discounts, their impact on consumer behavior, and whether they remain as effective as they once were. Furthermore, we’ll explore alternative strategies that can help brands penetrate the Indian market and build a loyal customer base. So, let’s get started!

How Do Discounts Impact Consumer Behavior?

Discounts have been a time-tested tool in the marketer’s arsenal. They offer a quick and tangible way to lure consumers, create a buzz around your product, and drive immediate sales. 

But beyond this, discounts make consumers happy. A scientific research study, Your Brain on Coupons: Neurophysiology of Couponing, shows that coupons spike the release of oxytocin, a hormone associated with love and happiness, and dramatically reduce stress. 

Moreover, it reduces the chances of your audience shopping around. The urgency of the discount coupons distracts shoppers from looking around, disincentivizing external deal-seeking. 

Additionally, it creates anticipatory regret. That is the regret of missing out on the deal. Setting an expiration date with the discount coupons triggers anticipatory regret, which drives shopping behavior.

Breaking Down the Indian Consumer Landscape 

India’s consumer market is expected to become the world’s largest by 2027, courtesy of the rising numbers of middle to high-income households. Triggering this rise further, is rising urbanization, which is allowing companies to reach consumers easily by opening more retail stores. 

Beyond this, some more factors impact the consumer landscape. They are as follows: 

Price sensitivity

“By 2047, if political and economic reforms have their desired effect, the India income pyramid will have a smallish layer at the bottom, a huge bulge of the middle class and a big creamy ‘rich’ layer on top.” ~ Rajesh Shukla, MD and CEO of PRICE. [source]

Almost 1 in 3 Indians are categorized as ‘middle’ class, and this number is expected to double in 25 years. Evidently, a significant percentage of India’s population falls in the middle-income bracket. 

Thus, price sensitivity becomes a vital factor driving purchase decisions. Most Indians consider the cost considerations of making a purchase, given their limited disposable income. Thus making discounts attractive. 

However, their view of purchase cost has changed with time. Traditionally seen as price-conscious, Indians now show an increasing appetite for premium items. This may mean they are now seeking value for their money rather than merely seeking to meet their necessities. 

Perceived Value & Cultural Influences

The need for value for money drives the Indian psyche. Thus, discounts are often seen as a way to ‘get more in less.’ Furthermore, practices like negotiation and bargaining are staples of the Indian local market. The same behavior transcends to small retail shops. Here, discounts may offer satisfaction from purchasing the product at a discounted price.  

Competition & Market Saturation

Brands battle aggressively for customers’ attention due to the glut of goods flooding the market. As such, discounts and sales are often used to increase market share and gain new consumers. However, the effectiveness of discounts can be blunted when every brand is vying for attention with similar offers.

Then and Now: India’s Perception of Discounts

In the past, discounts held a special place in the hearts of Indian consumers. They were seen as a lifeline for budget-conscious shoppers. But the landscape has shifted, and the answer to the question of whether discounts are still effective, in isolation, might be a resounding NO. The keyword is ‘IN ISOLATION.’ 

Today’s consumers are better informed, more discerning, and demand more from the brands they engage with. For instance, they are becoming more sustainable, heavily supporting local businesses and prioritizing wellness. Hence, offering a discount alone is unlikely to win their unwavering loyalty. 

So what do you do? You penetrate the market and build a loyal base. Here’s how! 

Penetrating Deeper Into the Market

So, what can brands do to penetrate deeper into the Indian market and build a loyal customer base? The answer lies in a holistic approach that goes beyond discounts:

Value-Based Marketing 

When value is front and center, customers can see how valuable your goods and services are to them. This naturally turns customers into brand boosters.

Marketing materials can be made more interesting and useful by modifying how that value is shared for different customer groups, target industries, or use cases. This makes your business look like a trusted guide much sooner. At the same time, your marketing team can focus on the target people who are most likely to be interested in what you offer.  

Additionally, you can see if you want to customize your marketing campaigns to suit India’s diverse regions and languages. What works in one region may not work in another. Thus, localization of marketing may come in handy.

Personalization in Discounts 

Not every customer wishes for a Buy One Get One or a product bundle. Different consumers have different needs, and it’s important you recognize them. For this, leverage the data you have at hand to understand individual customer preferences and purchase behavior. Personalize discounts and offers based on this data.

You may also segment your customer base and offer personalized discounts to different customer segments. For instance, loyal customers can receive exclusive offers and access to loyalty programs.

Product Experience 

Experiential marketing is on the rise. Consumers are excited to interact with their loved brands, and one way to make it even more special is by letting them experience your products in a specially designed environment. 

This way, you give them a chance to experience how the product can make them feel even before they buy it. And then you can lure them in with a discount. It’s that simple!

Quality With Affordability For the Win! 

Discounts standalone may not be as effective as they were a couple of years back. But its impact can be significant when paired with value-based marketing, personalization, and more. Together, they will build trust and loyalty in your consumers and magnify the positive impacts discount has on consumer minds. 

We at StartInc like taking a holistic approach to grow brands and help them reach their consumers. We rely heavily on data analytics and research, integrating them with traditional and modern growth strategies for steady improvement. 

Are you ready to grow with us? 

If you are, let’s get talking!