The main social benefits of offering discount

Benefits of Discount
The benefits of offering discount are as below:

Increased customer traffic: Discount offers, coupons, or special deals tend to attract more customers to the store. Increase in customer traffic boosts the sales. Apart from buying discounted products, the customers may explore other products in the store and buy the products later.

Improved reputation/goodwill: Offering discounts also enables to build up the company reputation. If discount offers are made available to senior citizens, military professionals, and the ones in need, businesses tend to gain reputation as a socially responsible organization.

Increased brand awareness: Discounts and special deals are effective in acquiring customers. Based on how the discounts are advertised, awareness about businesses can be generated, thus, bringing customers to the stores while the discounts are ongoing or in future to try other products.

Attained sales goals: Businesses are required to attain sales goals so as to remain profitable because businesses tend to have targets on a weekly, monthly, quarterly, and annual basis. Considering the seasonal fluctuations due to the buying pattern of consumers, discounts compensate for the lean or no-peak seasons, thus, making it possible to reach the goals irrespective of the forecast.

Increased customer loyalty: One of the significant benefits of discount offers is increased customer loyalty. The chances of gaining repeat business or same customers are more by offering weekly or monthly discounts or attractive deals such as execution of loyalty rewards program.

Monetizing of old inventory: Discount offers help in disposal of old inventory or products that have been stuffed in the stores for a long time. These products are placed in the store front to increase visibility by offering big discounts. Such discounting initiatives enable to strengthen the customer base and widen the market horizons.

Types of Discount
The different types of discounts are elaborated below:

Quantity discounts: Quantity discounts are based on the general concept of economies of scale. If a seller sells products in large quantities to a customer, different savings can occur. The quantity discount is an offered incentive to a customer that results into cost reduction per unit of goods. Thus, such kind of discount is offered by the sellers to entrap consumers to buy in large volumes.

Trade discounts: Also, termed as functional discounts, trade discounts are given to the intermediaries for various functional roles carried out in the distribution of products. Thus, trade discounts are provided to the distributors as a compensation for varied roles performed within the distribution channel. For example, discounts offered to the retailers for putting on displays or to the wholesalers for extending warehousing facilities.

Promotional discounts: These discounts are distributor allowances given as an acknowledgment for the promotion of manufacturer’s product through local advertisements, special displays, or other marketing strategies. The allowances are paid as a percentage reduction in the price or directly credited to the distributor.

Seasonal discounts: Business conditions tend to fluctuate periodically. Seasonal discounts are potentially effective in managing uncertain revenue patterns and ensuring inventory turnover during the non-peak times. The more the elasticity in demand, the higher are the discounts. For example, warm clothes in summer and reduced telephonic call rates at night.

Cash discounts: Cash discounts, also called early payment discounts, are offered as a reward for making in-time payments. Thus, a cash discount is allowed by the goods/service providers as a means to encourage customers to make timely payments.

Geographical discounts: These discounts are the price differences in reference to the buyers or consumer market locations. Geographical discounts are generally offered by the suppliers and entrepreneurs to various retailers based on the geographical boundaries.

Thus, the customers/retailers who are located nearby the businesses tend to obtain higher discounts. While the customers/retailers situated far off receive lesser discounts due to the extra transportation costs incurred in delivering the goods/service to the destined location.

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