Discounts are the primary mechanism to capture customers through price segmentation. In B2C, those who are more price sensitive perform the extra steps it takes to get the discount. Without these steps, they would not transact.
Cutting discounts is an easy short term lever to pull to drive revenue. When customers don’t have an easy alternative, they will keep paying the premium price. However, the search for an alternative will begin shortly. I believe that is when a company can quantify the value of customer loyalty. The full combination of relationships, loyalty programs, rebates, and other incentives are weighed against the increase net price. When the competitive alternative is identified, I bet that it sets a lower bar for acceptance. The competitive alternative finds it easier to attain customer loyalty.
This Starbucks announcement to reduce the discounts will be interesting. It will be somewhat strategic / surgical to reduce discounts few people use or those that are simply not profitable, but that means some customers will be effective. If “it takes approximately 66 days”, we can see if this pans out for the B2C customer, it would be 12-19-2024 for 66 days from this publishing plus a couple weeks for changes to take effect (+2wks = 1-2-2025) + couple weeks for the novelty drinks to be substituted (+2wks = 1/16/2025).
Pricing, well played. 