In China, local consumers are used to festivals, discounts, and promotional events. Should Brands give discount on e-Commerce in China?
This promotion frenzy is having a direct impact on the luxury and fashion world that needed to adapt. Among different promotion strategies, discounts and coupons are the most used in China. However, discount promotions for luxury brands can somehow kill your brand slowly.
What Makes Luxury Different is the Price
For Chinese luxury shoppers, the 6 major characteristics that define luxury are:
The price of luxury products is usually much higher than ordinary products because of the other five characteristics. This link between those factors has formed a common image that higher price brings luxury products with better quality, outstanding aesthetics, high rarity, extraordinariness, and unique brand symbolism.
Discount is Boosting Sales… but Affecting high end Brand Image
Discount is very efficient, which has been proved over time. Brands are seeing significant growth in revenue during the discount period, but they are actually losing more than they gain. When the price of luxury brands is discounted, those luxury characteristics connected with the price are also affected.
From the consumption side, seeing discounts on luxury products brings short-term motivation to purchase. But when customers are used to discounts, they will wait for your discount period which is actually declining your daily sales and decreasing your annual revenue.
From the brand side, giving discount promotions for luxury goods can harm the luxury image of a brand. This is even more deadly in the long run for your brand because the exclusive brand identity is always the core value of a luxury brand.
Larger Luxury Brands Combine GWP and Gifts
In recent research by Vogue Business and RE-Analytics, they analyzed the discount offer of more than 100 luxury brands on Matches Fashion、Net-a-Porter、Mytheresa, and Luisaviaroma. The data shows that most brands are giving more discounts in 2020 Q1 than in 2019 Q1 due to Covid. However, the more famous a brand is, the less discount they are providing. Large brands including Loro Piana、Eres and Christian Louboutin has made 0 discount promotion in the past 3 years.
If discounts are not suitable for Luxury brands, what else can we do to promote our luxury brands?
GMA can help you! As a true professional in marketing and branding in China, we provide 360° service to support you in your development in China.
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