Price cut trap: How brands can go beyond the promo this sales season

With the holiday season fast approaching this fourth quarter, it’s no wonder more e-commerce sites are doubling down on double digit dates such as 9.9, 10.10, 11.11 and 12.12 to launch mega sales. From Qoo10’s 10.10, Lazada's Online Revolution, to Alibaba’s Single’s Day deals, double digit dates are fast becoming associated with great bargains.

Just yesterday, Shopee concluded its two-week long 9.9 sale which pushed daily deals and major price cuts from brands on its platform – along with mega pushes in the digital and influencer marketing space. This saw 99 cent deals, along with Shake to Win promotions and various other activities to engage users.

That being said, while sales are a good touch-point for brands and consumers, ensuring brand interactions have mileage is a different story altogether – according to several industry players. As such, slashing prices might not be a sustainable long-term strategy for brands, Jennifer Arnold, VP of marketing, Asia Pacific Japan and Greater China, SAP Customer Experience, said. She added:

Although customers are initially drawn to discounts, it may not be enough to attract them back again and again.

As such, in order to retain customers and not fall into the trap of consistent price cuts, brands need to provide personalised, engaging experiences, built by deeply understanding customer journeys from analysing data.

“This will pay off in the long run, as consumers are willing to pay a premium for a buying experience that’s tailored to their lifestyle and needs, and quality on-going service,” Arnold explained.

Quoting Publicis Media’s MoCo study, Navaneeta Das, head of product and client development, APAC, Publicis Media, said brand awareness and equity is as important as price in certain categories. This is especially FMCG and beauty categories. Reviews are also very important for categories such as Electronics, Home Appliances etc.

In addition, the experience of the content and navigation in the e-retail platforms is also crucial almost equally between desktops and mobile, though mobile screens have higher penetration in many SEA markets, she explained.

“The experience in the mobile apps for those categories that leverage apps for online buying is another important factor. So there are many levers to be used apart from price, and some of them much more sustainable than price cuts,” Das added.

Another important measure to consider is engaging online sellers when it comes to pricing, said Hemanth Magal, consulting partner, Ogilvy Consulting, Singapore. This is especially when it comes to sellers on various marketplaces such as Lazada and Qoo10. He added:

Some brands have even resorted to blacklisting online sellers that severely undercut prices in a way that could hurt their brand.

As for ensuring promotions are effective, price discounts should be limited as promotions are more meaningful when they are tied to specific marketing objectives such as getting offline buyers to buy online. (e.g. Buy offline and get a discount for your next online purchase). Other objectives include recruiting new buyers and cross-selling specific products. (e.g. trial products).

Marketing will be hosting the Asia eCommerce Awards on 29 November 2018. Entries will recognise the best etailers, innovations and campaigns from across the region. Check it out here.

Personalised customer experiences

To deliver a highly personalised and deeply engaging customer experience, SAP’s Arnold explained that today’s consumers want to shop where they want, how they want, through the channel they want, while in a seamless offline-online experience.

“They also like the ability to touch and feel products and have experiences with brands, which is why online retailers are increasingly creating brick and mortar stores or pop-up stores to provide this. Some are even using augmented reality technology,” Arnold said.

Brands also require a robust omni-channel approach, based on having a view of the customer across all touch points at all times. According to Arnold, this includes advanced data management and analytics tools to anticipate customer behaviours and understand real-time intent, which enables accurate decision-making on pricing, stock, promotions and campaigns.

Agreeing with Arnold, Ogilvy Consulting's Magal said personalisation also emcompasses personalised promotions based on a customer’s shopping behaviours and history with the brand.

“Brands can tap on this behaviour and send these customers a personalised offer before the next time they might buy. The offer could be something special and personalised to be used during the upcoming sale season,” Magal explained.

For Samrat Sengupta, regional e-commerce strategy head, Publicis Media, brands also need to rely on engagement tactics which chime in with their brand’s messaging. It is also important to keep the brand differentiated and not fall into the habit of using price as the only selling point.

In addition, the online consumer though price sensitive and convenience hungry is highly engaged, spending on an average three to four and a half hours online here in the region, Sengupta said, adding:

The build-up [to the sales event] is as important as the actual sales events.

“A strong O2O strategy needs to be in place so that users can experience the brand in its totality, these sales need to be treated as customer acquisition channels and price cuts should be handled in a way that in the long term the CAC is paid off by the LTV of the acquired user,” Sengupta added.