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One in four SMEs discount their products too much

New research from Australian marketing services provider Salmat has found that when it comes to discounting products, over a quarter (28 per cent) of SMEs think they discount too much, with 56 per cent of SMEs discounting weekly or monthly.

Whilst discounting can be one tactic to stay ahead of competitors, it isn’t a long-term strategy – especially for SMEs. Australian consumers are largely driven by price with many saying that price counts for close to 70 per cent of their purchase decisions. But when asking consumers what their top concern was when buying products from a brand – value for money (85 per cent) led by far. This means purchases aren’t just about the price tag. Instead, marketing messaging should focus on the value a product can bring to a consumer.

Karen Lewis, Head of Digital and E-Commerce, Salmat, said, “Businesses both large and small discount, and whilst price is still a huge deciding factor for consumers, it isn’t the only way brands can differentiate themselves. Consumers are more receptive to brands that deliver value for money – this is still price driven but demonstrating value for money is something marketing can really own. Instead of discounting heavily or focusing on undercutting the competition on price, marketers should instead demonstrate why they deliver the best value for money. Marketing messages can focus on this in addition to offering promotions. This of course needs to be delivered to the consumer via the channel they use to search and browse for brands.”

SMEs aren’t investing in the right marketing channels

Looking at the marketing channels that SMEs invest in to try reach consumers, most invest in social media (44 per cent) and the brand website (44 per cent). But this investment doesn’t match the behaviours of the consumers they are trying to reach. The top two sources noted by consumers were Search Engine results (49 per cent) and recommendations from friends and

“Consumers are increasingly turning to Search Engine results for recommendations and information before making a purchase,” Ms Lewis said. “This could be because sometimes it’s quicker and easier and to search for questions than to call or talk to a friend. Yet, when you look at the SME marketing landscape, the investment in SEO and SEM just isn’t there from marketers. Marketers need to ensure they are investing budgets in the most effective way possible to achieve brand impact and reach their targets and objectives, regardless of the size of their business.”

SMEs need to harness greater brand loyalty


Two in five (40 per cent) SMB marketers said creating customer loyalty was one of the biggest marketing challenges they faced. To combat this, they focus on delivering great customer service (48 per cent) and brand visibility (35 per cent) to build brand loyalty.

On the flip side, the top reasons Australians continue to buy a specific brand, apart from price and quality, are because they trust the brand (67 per cent), for special offers/promotions/sales (49 per cent) and for loyalty reward points (36 per cent).

“Trusting a brand or service is highly important to a consumer – but so many factors contribute to trust,” Ms Lewis added. “Delivering great customer service is one of them and should continue to be a focus for marketers. Beyond that, SMEs can look at driving brand loyalty through offering loyalty programs and rewards to showcase how their products deliver superior value for money.”

Source:  InsideSmallBusiness



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