Financial Analyst Urges Businesses to Make Key Considerations Before Introducing Discounts This Season

Financial analyst, Nelson Cudjoe Kuagbedzi has advised businesses across the country to carefully evaluate their internal numbers and market position before rolling out discounts during the festive season. Speaking on the Business Breakfast on Zed, he explained that while discounts can boost sales and attract new customers, companies must ensure their decisions are informed by sound financial reasoning.

According to Kuagbedzi, the first factor businesses must assess is their sales volume for the year. He noted that companies that have not met their projected sales targets from January to November, and still have large quantities of unsold stock, may introduce discounts as a practical way to clear inventory. “If they haven’t done maximum sales, and they have stocks lying out there, and per their projection they realize they may not sell the needed volume, then they may want to give discounts,” he explained.

Kuagbedzi added that some businesses also see discounts as a way of appreciating their customers’ loyalty. He said companies often reduce prices as a form of reward for consistent patronage throughout the year. “Some companies may also give discount in the way of sort of rewarding or thanking customers for the purchases that have been done during the course of the year,” he noted.

Another crucial factor, he emphasized, is the condition and life span of stock. Companies holding older products, especially those nearing their expiry dates, may lower prices as a strategic move to prevent losses. “When they are having old stock and they are getting closer to their expiry date, you just have to reduce the price in order to sell those products,” he said.

He further pointed out that beyond clearing inventory, the overarching goal for most businesses is to increase sales volume, which ultimately drives profit margins. He stressed that discounts can serve as a powerful marketing tool in highly competitive markets. Citing the electronics sector as an example, he explained that several outlets offer similar products, making pricing a key determinant for customers. “Once you are giving discount, your price becomes a little bit cheaper and competitive compared to other peers in the market. That will go a long way to attract customers to your place,” he remarked.

Kuagbedzi urged businesses to weigh all these considerations carefully to ensure discounts serve their intended purpose, boosting sales without undermining profitability.