A discount gives the impression of being the simplest answer to price pressure. It can be applied easily and quickly, and in many people’s opinion it is the only possible and effective solution.
- Is that really the case?
- What is the actual effectiveness of responding to the market situation with a discount?
- Does such an action have its consequences?
It happens that a supplier gives an extra percentage point to a distributor, assuming that this will help them win the market and “make up” the volume. Sometimes it is the distributor who argues that they had to adapt to market realities and lowered the price, which negatively affected their margin, and thus the supplier “must compensate” them for that loss.
It often happens in practice that the additional discount mostly ends up in the final price, affecting the price perception of the product and the manufacturer. The distributor, fighting for the transaction, passes the reduction on further in order to “be the cheapest” in a price comparison site, a tender or day‑to‑day business. The customer learns a new reference price, and the market moves down another step.
And that’s where the real problem begins: it is very easy to destroy a price and extremely difficult to rebuild it. Once lowered, like an anchor it remains in the customer’s mind for a long time. Every attempt to return to the previous level triggers resistance, comparisons like “but last month it was cheaper,” and this is immediately visible in online channels. A change upwards requires justification, communication, time—and usually costs more than the earlier discount.
In the meantime, the story repeats itself. Other market players react the same way, the distributor comes back for further allowances, often conditioning this on exposure or sales volume. The vicious circle continues, margins shrink on both sides, and the “promotional” price becomes the new norm. The space for product development, customer service and marketing disappears, because cash leaks out in discounts. Does there exist any way to base sales on a true value proposition? Is it worth fighting for the ability to provide meaningful distribution support, which indeed costs money and is financed from margin?
People say/write that the value proposition is a clear answer to the question of why the customer should choose us, even if we are not the cheapest. A list of potential benefits with which we can compete in the market appears here, including:
- predictability of deliveries,
- good relationships,
- constant availability of goods,
- faster order fulfillment,
- longer warranty,
- implementation support,
- training,
- after‑sales care,
- easier service,
- better documentation,
- flexible payment terms,
- other solutions that save time and money
The customer really feels the value, and our cost is measurable and under control. A well‑thought‑out value proposition works at every stage of product or service distribution. Instead of a low price and “guarantee to the door,” we are able to generate an advantage that does not automatically turn into a markdown on the shelf. There is, however, a condition—probably not the only one—we ourselves must be able to define and understand the role of added value in the sales process. To break the spiral of devaluation of the product, brand, business, it is worth asking yourself at least three questions before we apply another discount:
- What customer problem are we solving with it?
- Is there another, cheaper for us way that gives them a greater, clear benefit?
- And can we communicate it clearly in the offer and on the product page?
If so, there is a good chance that we will defend the price—and build a relationship that does not end at the first opportunity of −5%. Differentiating the offer and skillfully emphasizing the uniqueness of our own actions can be efficiently and effectively implemented with a sales support program. To design it well, it is worth knowing who you are in the market and what value you bring.
