Value Branding, Perpetual Discounting, Customerer Intelligence, Koutons and Peter England

A couple of years back some brands descended on the Indian apparel marketing space with a very interesting value model. These included LaFanso, Cantabil, TNG, Lee Solly, TQS, and Koutons. The brands announced ‘drop a bomb discounts’ previously unseen and unheard to lure value conscious middle class buyers. Take a look at the following:

50%+50% off

505=40% off

80%+20% off

90% off

 

But now most of these brands are reeling under crises. The results of Cantabil Retail India has not been good. It reported a standalone sales turnover of Rs 37.83 crore and a net loss of Rs 4.24 crore for the quarter ended Dec ’12. The case is no different for the other discount brand Koutons. The company is debt ridden and has been incurring losses. It has been closing down its showrooms discontinued it’s another brand ‘Charlie’.  Once a common sight on the market space, these brands seem to be slowly vanishing form the scene. A variety of factors have contributed to their fate including excise duty, raw material costs and inflation. But it is interesting to explore these brands from marketing perspective. Is deep discount model which rests on a perpetual promotional offer by which a high maximum retail price (often greater than top brands like Van Heusen and Park Avenue) is discounted by a big percentage to give an impression of irresistible bargain tenable in the long run?

 

Peter England arrived on the market and went on to write an impressive success story.  Unlike Van Heusen and Louis Philippe which were premium offerings, this was a value for money offering by Madura Garments. It went on to carve out a niche in ready to wear menswear market by intelligently packaging its value for money proposition as ‘honest brand’. By calling itself as an ‘honest shirt’ it indirectly struck a chord with value sensitive Indian buyer without bringing price into an explicit consideration. The affordability was brilliantly packaged as honesty. The idea was to deflect consumer consciousness from a discourse involving price, cheap, economy and bargain. It was ‘economy’ decently packaged.  The brand developed ‘down to earth’ ‘unpretentious’ personality which connoted ‘value proportionate to price’. Later the communication took the brand to a notch higher by a symbolic campaign ‘More is less’ in order to appeal the younger audience (psychographic matching).

 

Sales promotion schemes by definition are short run activities and generally involve tactical maneuvering of customer behavior. These are aimed to influence demand (spikes) by offering short term consumer incentives. But the crucial issue is can sales a promotion activity (explicit discounting in which high prices are reduced) be made part of brand identity? What effect does a sales promotion based discount strategy has on customers?

 

The attribution theory explains how people interpret events. People try to figure out why things happen in a particular way or why people behave in a certain manner. People try to make sense by determining cause behind a phenomenon. A short term deep discount can be interpreted as sudden stock liquidation or a celebration offer or competitive maneuver. But a long term use is likely to make people suspicious about genuineness of the offer.

 

How long a discount offer is likely to be perceived as golden opportunity? The adaptation theory explains that people have a tendency to get used to or adapt to a situation. As a result a situation/ stimulus ceases to be stimulating which causes people to seek novelty elsewhere. An offer like 50%=50% is likely to be perceived as an exciting offer for some time in the beginning and act like a magnet but its long term usage is likely to rob uniqueness out of it.

 

Discount brands tread on a difficult territory. Perpetual discounting can position a brand as cheap and create undesirable connotation. It is psychologically gratifying to be able to grab a bargain but socially it is undesirable to be associated with a bargain brand. People love to buy an aspirational brand (brand imagery) at a discount (made affordable) but shy away from a brand cheap brand (personality). There is fine distinction between a cheap brand and inexpensive brand. The concept of social signification applies equally to economy customers. It is here brand needs to deflect bargain oriented discourse from their image.

 

Peter England built its market by smart use of symbols in communication. By developing an ‘honest, down to earth and unpretentious’ personality it developed image of an affordable brand. A price oriented strategy promotes price sensitive culture and preempts a brand from seen from any other angle. Deep discounting model that relies upon ‘drop a bomb’ discounts to attract customer on equally ‘blow your tops’ maximum retail price is likely sow seeds of its own destruction by making customer clinically analytical about what actually is in the bargain.

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