DISCOUNT MANAGEMENT

Prepared by:
Rachel A. Joves BSBA-MM3
MRTG 106
Learning Objectives:
• Define Discount Management.
• Discuss why Discounts are granted.
• Discuss when and how discounts are used.
• Define Discount Pricing
• Discuss types of discount pricing
• Benefits of discounts
• Advantage of Discount Pricing
• Disadvantage of Discount Pricing
What is Discount Management?
• Discount management allows you and your
suppliers to agree to early payment in
exchange for discounts.

•Discount management is a process that

allows you and your suppliers to request or
offer early payment in exchange for discounts
from the supplier.
Why Are Discounts Granted?
• First, let’s look at why salespeople give discounts in the
first place.

• Discounting in itself is not a bad thing, especially in for B2B

companies where discounts are considered to be standard.

* Encourage large-quantity purchases

* Obtain favourable terms of payment
* Obtain favourable terms of delivery
* Get customer to promote the product
* Performance penalties
* Get specific shelf-space
When and How to Use Discounts?
• Discounts should be used when there is something in it for
the company.

• Most firms will keep track of discounts between the list-

price and the invoice price, but then stop keeping track.

• Discounting should reflect the willingness to pay of the

customer or get the company something in return,

• Due to the often careless discounting behaviour inherent in

some salespeople, the largest discounts are granted to
those with clever procurement professionals. 
Discount Pricing
• A type of promotional pricing strategy where
the original price for a product ir service is
reduced with the aim of increasing traffic,
moving inventory, and driving sales.
3 types of discount pricing
• SEASONAL- is exactly as it states- businesses offer
promotional discounts as seasonal goods or during
particular seasons.

• CLEARANCE- The word "clearance" is a marketing

term businesses use to indicate their products are for
sale at unusual discount discounts, like a buy one get
one free offer for a limited time only.

• VOLUME- A discount incentivizes customers to

purchase goods in multiple or large quantities.
Bundling is a popular form of this type of quantity
discount.
BENEFITS OF DISCOUNT
• Discount not only benefit your business- they
also benefit customers. You might see more
customers frequenting your store, increase in
sales, and a higher bottom line in business.

• Offering discounts can also get rid of surpluses

in inventory you have allows you to make way fir
new inventory. Having too much inventory can
lead to storage costs or shrinkage.
BENEFITS OF DISCOUNT
• Customers who receive discounts might have
more loyalty toward your store.

• Discounts help make customers feel like they are

getting better deals. And, customers who receive
loyalty discounts might feel more valued.
Advantage of Discount Pricing
• Discounts to reward customers who purchase in
bulk, repeat customers and employees build
customers loyalty.

• Loss leaders are effective for retailers who need

to increase traffic in the store.

• During a short-term discount period, more units

are sold, allowing the company to decrease
inventories stock and temporarily raise revenues.
Disadvantage of Discount Pricing
•Consumers can often associate low price with low
quality, even more through when the brand name is
not familiar.

•Implementing a discount pricing strategy increases

the chance that your product will be perceived as
lower in quality.

•While you may gain customers, that make decisions

on price alone, other customers may choose
competitor products because of perceived quality.
Summary
• Discount management allows you and your suppliers to agree to early payment in exchange
for discounts.

• Discounts should be used when there is something in it for the company.

• A type of promotional pricing strategy where the original price for a product ir service is
reduced with the aim of increasing traffic, moving inventory, and driving sales.

• Seasonal - is exactly as it states- businesses offer promotional discounts as seasonal goods

or during particular seasons.

• Clearance- The word "clearance" is a marketing term businesses use to indicate their products
are for sale at unusual discount discounts

• Volume- A discount incentivizes customers to purchase goods in multiple or large quantities.

• Benefits of Discount- Discount not only benefit your business- they also benefit customers.

• Advantage of Discounts- Discounts to reward customers who purchase in bulk, repeat

customers and employees build customers loyalty.

• Disadvantage of Discounts-Consumers can often associate low price with low

quality, even more through when the brand name is not familiar.