Well, the whole branding proposition is rooted in reducing the price elasticity of a brand. Whenever a brand has a loyal customer base, centered around emotional attachment and uniqueness of the brand, you can command a premium price just because you have a “Brand” in customers’ minds. Now, would you line up with those not-so-known brands that give you an ugly fight with discounts?
Unfortunately, the answer is not a straight yes or no. Technically speaking, “it depends”.
If the discount by other brands is due to economic downturn, one has to see the extent that the target customers of a brand have been affected due to recession. Discounts for “Economy class” hotel rooms would make more sense during recession than discounts for presidential suits. Discounts on small cars would make more sense during recession than discounts for BMW or Jaguar. On the other hand, if the discount is offered not to match the economic cycle but to facilitate an easy entry by a new brand, the leading brand may not be worried much about it. However, in many cases, an easy entry of a discounted brand, if proved to be of higher quality and value, may pose a long-term risk to the existing leader. In that case, the premium brands may temporarily reduce prices to an extent which is still higher than the price of its competing brands, yet very close to them. It would signal a superior quality of the “Brand” vis-à-vis the lower price of the new entrant in the minds of customers.
So, should a premium brand ever initiate discount? Of course, they should. But with a limited time frame in mind, otherwise, it would be extremely difficult to signal the premium branding proposition in the market. With right mix of emotional value in a brand, pricing becomes secondary in most cases.