Why should marketers care? Because price-off deals are not just tactical incentives they can become a brand’s undoing. In India’s fast-moving consumer goods (FMCG) sector, where the overall market is projected at US $245 billion in 2024 and poised for steady growth. A flood of discounting may sell units—but many brands built on inherited legacy find themselves eating their seed-corn, with market share shrinking and profitability evaporating.
The allure and the trap of deep discounts
In a value-sensitive market like India, discounting makes sense on paper. A promotional price lowers the barrier to purchase, drives traffic, shifts inventory. Marketing research confirms that discount pricing serves as a powerful short-term lever.
Yet the cost becomes visible when discounting becomes habitual rather than strategic. A key study from 2004 found that frequent price promotions erode brand image and recalibrate consumer expectation downwards. One Indian marketing commentary warns: “Aggressive discounting now negatively impacts both consumer trust and brand loyalty.
Consider the case of “Brand X” (name withheld): A third-generation marketer in Bengaluru inherited a widely recognised FMCG brand. He launched a heavy “Buy 2 Get 1” and “40 % off” campaign to match the competition in 2023. Volume spiked during the promotion week, but within six months, shelf share slipped by nearly 2 percentage points (from 18 % to 16 %) and the gross margin dropped by 4 %. When asked whether the brand raised profit, he changed the subject. When asked about share loss, he offered vague comments about “channel dynamics”.
Why? Because when a brand built equity over decades becomes one of the “discount brands”, its perceived value shrinks. One branding consultancy summarises: “The more you discount, the more customers start to expect lower prices… brand perception shifts from one of quality to one of affordability.
Retailers and digital platforms press for trade discounts, manufacturers face commission creep and quick-commerce platforms demand deep markdowns (as one report noted, “brands are grappling with high commission fees and deep discounting practices” in India).
Surrendering the seed-corn
Marketers often inherit brands built by their predecessors brands that are the seed-corn of future growth. Instead of nurturing those assets, some become dependent on deal promotions, as though the brand itself were a transactional commodity with no future.
You eat the seed-corn. Offer too many cut-price deals and you accelerate short-term volume at the cost of long-term equity. The inherited brand loses relevance. The next marketer finds an invisible brand no premium, no loyalty, no discernible edge.
Brand management in India observes: “A brand name, but because the rest of the marketing mix was neglected… it had to fight for shelf space on the basis of price and was ultimately doomed.
So when a brand manager cannot answer the simple question, “Did the deal increase profit?” or “What happened to your share six months later?”, you know the structural damage is done. It may have driven temporary sales but the underlying asset is compromised.
Pay peanuts, Get monkeys
Discounting doesn’t stop at product price some clients try to shave their agency’s services too. In India’s advertising landscape, a manufacturer negotiating down the agency’s remuneration may feel victorious but is it wise?
Industry veterans say: instead of minutiae over a few percentage points of agency fee, focus should be on performance via the 85 % spent on media, time and space. As one senior agency executive put it privately: “No manufacturer ever got rich by under-paying his agency.”
This is especially true in markets like India where media fragmentation, regional language channels, influencer content and digital-commerce tie-ups demand strategic investment—not bargain-hunting. Shaving the agency fee may only shift risk to less experienced talent, under-resourced creative teams, and cheaper execution—ultimately eroding the brand’s long-term returns.
Agency ambitions misaligned with product realities
Many Indian agencies, especially in the UK/US-influenced global networks present in India, place a premium on creative awards rather than measurable sell-through. The creative director may talk of “avant-garde work”, “brand narrative” and Cannes Lions ambition but rarely of retail sell-out or ROI.
In an Indian credit-alcohol advertising context this is magnified: an agency may be rewarded by its client for shiny work but downstream distribution, retailer margins and consumer response remain absent from the conversation. The result: millions spent in “originality” that says almost nothing about the product’s virtues, and sells even less.
When agencies prioritise their own trophy cabinets over their client’s cash register, clients are bamboozled into paying millions year after year. That trend persists in India’s metro-urban sectors even as smaller nimble challengers edge in from tier-2 towns and digital-first e-commerce channels.
Repeated mistakes, the cost of inertia
The fourth problem: agencies and by extension clients often repeat mistakes year after year. Deep discounting. Ever-present promotions. Generic ATL advertising lacking measurable KPI’s. Retail activation treated as an afterthought.
Academic work in India on sales-promotion in FMCG categorises this pattern: a large chunk of promotional increment (the spike during deals) is simply switching from rival brands, stock-piling by consumers, or speeding up future purchases not genuine growth.
If you assume the deal volume is incremental and permanent, you may be deluded. Once the deal ends, the higher baseline disappears and your brand finds itself weaker.
Worryingly, Indian distribution systems show that mis-aligned promotion schemes create friction: for instance, a 2025 KPMG India CX report notes that 32 % of distributors in India said misalignment on promotion schemes and stock norms is negatively affecting onboarding experience.
Why this matters now in India
India’s FMCG market is at inflection. With a size of US $245.4 billion in 2024 and expected to grow at a CAGR of over 17 % through 2033. Meanwhile, digital commerce, rapid-delivery platforms and rural consumption are unlocking new routes. Within this environment, legacy brands cannot afford to degrade through discount addiction while agile challengers build equity via innovation and value.
When entire categories shift say to premiumisation, sustainability or direct-to-consumer niche brands—you risk being stuck as the discount-brand that lost relevance. Ask any brand manager: the question isn’t just “how many units did we sell at 40 % off?” but “what is the sustainable volume and margin at standard price?”
What can marketers do instead?
Treat the inherited brand as seed-corn. Protect its equity. Use promotions as fuel, not as fuel depot.
Audit every deal for profitability and share impact. Ask: Did share grow and hold? Did margin recover? If you’re changing the subject alarm bells.
Measure agency investment by results, not fee. Move from input-thinking (fees, spend) to outcome-thinking (sales, margin, brand health).
Align creative with commerce. The agency brief must include distribution and sell-through targets. Artistic awards are nice but won’t keep the lights on.
Avoid discount-overuse. Use deals selectively clearance, trial, new-user acquisition—not as default go-to. Research shows customers acquired via discounts are up to 50 % less likely to repurchase.
Build real brand differentiation. If the only lever you use is price, you end up competing with unbranded, private-label alternatives. Some sources call this “fighting for shelf-space on the basis of price.
Discounts aren’t evil—they are tools. But when brands treat them as the primary strategy, the seed-corn gets eaten, equity erodes and competitiveness fades. For Indian brand managers inheriting legacy assets in a market surging toward premiumisation and digital complexity, the questions are stark: Are we building or bonking the brand? Are our deals driving long-term value or just volume that vanishes when coupons end? The next era demands discipline, creativity aligned with commerce, and a willingness to refuse the easy hot fix of price-cuts. Because if your brand vanishes when the deal ends—you weren’t building a brand, you were discounting one.
