Escaping the Discount Culture

Are we living in a discount culture? It is no coincidence
that the two most successful, and copied, Internet retail models of the last
few years are Groupon and Gilt, which are both basically avenues for
price-cutting. And the newest trend is “extreme
couponing
,” now a
series on TLC,
where people manage to game the system enough so that they can get
tremendous amounts of product basically for free.

Yet, what’s striking is, not everyone has fallen victim to this.

On Twitter this morning, Andrew Hanelly, social media guru at TMG, which publishes JCK, asked, “Have
you ever paid more for something because of the brand even though you knew
there was a cheaper alternative?”

Michael Schechter of Honora answered that
most people don’t buy generic cereals. And I brought up
Apple products, to which Michael responded,
“Alternatives and equivalents are not the same thing.”

Now, with all due respect to Michael and the magic of Steve
Jobs, who has gotten a fair amount of my dollars, there are Apple
equivalents out there.
But, to a certain group, only Apple will do. The
company has convinced consumers that Apple equals quality, so it’s “safest” to buy
from that company. And, for that reason, its products are rarely discounted.

This isn’t something that Apple built overnight—it took
years of branding, innovation, and a commitment to getting things right. But it
has worked. We even see this in the jewelry industry. We all know that the
Pandora doesn’t necessarily make the cheapest charms. But people buy them
anyway, because of the power of its name.

The “discount culture” isn’t going away, and chances are the increased
use of smartphones
will keep price pressure on retailers. Yet the companies
who can convince consumers their brand always equals quality, and that they have no equivalent, can still rise above it.

 

UPDATE: Michael adds further thoughts here.

JCK News Director