“Don’t give discounts”

“Don’t give discounts”
What Mauritius can learn from Brick Lane and Norwich

 

— Sean Carey  

 

Cut price, bargain basement, 2-for-1 offers. Are these familiar discount phrases now being applied to Mauritius?

 

I’ve just read a report from Reuters. It says: “Best known for its azure waters, white beaches and luxury spas, the Indian Ocean nation has assumed an aggressive international marketing campaign and its hotels have offered big discounts as it fights to maintain market share.”

 

 

 

This is clearly a reaction to a recent statement issued by the Mauritius Tourism Promotion Authority that showed that tourist numbers fell by 9% from 757,688 to 689,082. Revenues are down 12.6% between January and October 2009 compared to the same period in 2008, with only visitors from France and Reunion showing an increase.

 

This is hardly surprising given the extent of the global economic slowdown and the fall in visitor numbers is in any case comparable with other destinations in the region like the Maldives and the Seychelles.

 

But the impulse response of discounting is concerning. I am all for good marketing campaigns although “smart” rather than “aggressive” ones work better in my opinion particularly if “aggressive” is code for “big discounts”.

 

Unlike the nation’s food which has a low recognition factor in the UK, Mauritius is renowned as high-end destination for long-haul travellers from Europe and elsewhere. But any significant reduction in the cost of a holiday runs a very real risk of destroying the brand, particularly because Mauritius is very well positioned in the “paradise island” category.

 

And the other danger in employing a discount strategy is that many consumers will continue to expect lower prices because they believe that the discounted price (even if it is at or below cost) is the “real” price and that anything more expensive is a rip-off.

 

A change in consumer expectations and behaviour is already on display in the UK after many high street businesses and supermarkets panicked and slashed prices or introduced new “value” lines as the economy went into a nosedive — even upmarket supermarket Waitrose felt obliged to introduce a low-cost “essentials” range, for example, in order to stimulate demand.

 

Similarly, many mid-market restaurant chains like Pizza Express and Gourmet Burger Kitchen also succeeded in pulling in customers by providing a steady stream of 2-for-1 offers using a combination of website registration and voucher inducements. Amazingly, even some Michelin-starred restaurants in the capital thought it necessary to offer discounts for lunch and evening meals much to the alarm of some restaurant critics who think that this strategy devalued the status of these establishments (they are right, of course).

 

What lesson can a market stall selling Mauritian street food in London’s Brick Lane and coffee at an Indian restaurant in Norwich provide for the Mauritian tourist industry? The answer is perhaps surprising.

 

Let me explain. I first came across three young Mauritians, two male and one female, selling items like chicken biryani, king fish vindaye, chick pea curry and roti when I visited East London’s most fashionable street for the annual Brick Lane Curry Festival on a warm and sunny Sunday in September. It turned out that they were students, originally from Port Louis, and selling food from their homeland’s culinary heritage was their way of earning some money to pay for their stay in the UK. This struck me as a very good idea.

 

I then asked an obvious question: what was business like? “It’s a bit up and down to tell you the truth,” replied one of the young men while his friends set up the stall. “We’re thinking that maybe we should cut our prices.” I told him that this was a very bad idea. The food was very reasonably priced – between £3 and £5 would provide customers with a decent meal. It was obvious that price was not the issue; the real problem concerned the unfamiliarity of British consumers with Mauritian food. Put simply, it is pretty much an unknown quantity.

 

I explained to the students what I thought would be a good solution to the problem. They should change the marketing strategy rather than cut prices. The banners on either side of the stall should highlight the Mauritian heritage much more boldly than “Mauritius island food” and that a brand name and slogan should be developed.

 

In an area like Brick Lane which has around 50 Indian and Bangladeshi restaurants it’s no good just selling chicken biryani – it has to be differentiated in some way. I suggested that they call it Belle Mare Biryani or similar and attach a story to it which can then be put on flyers. For example, this way of making a biryani was brought to the paradise island of Mauritius by those brave Indians who migrated from the subcontinent in the 19^th century. And then my mother’s grandmother who was renowned in her village for her cooking skills gave it a special twist by adding a very special secret ingredient.

 

One of the great tricks of PR and marketing is that a story doesn’t have to be absolutely true; it just needs to be plausible enough to catch the public’s attention. Doing something also helps. I suggested that they give out some free samples of gateaux piments as well because the people who visit this area wouldn’t be familiar with them but would like the taste once they’ve tried one. And because the main ingredient, crushed yellow lentils, is cheap it wouldn’t cost much.

 

This advice was recently given so it will be interesting to see whether they implement the advice and, if they do, what the impact on their sales would be. I have no doubt that their sales would improve.

 

Where the Brick Lane students were following a poor marketing strategy by cutting prices, a coffee seller in Norwich had already found a better way.

 

Some weeks later I was invited to the first anniversary party of an Indian restaurant in the East Anglian city of Norwich (just over 100 miles from London). It had been opened by a Bangladeshi friend of mine who in partnership with some other family members runs one of the most successful restaurants in Brick Lane and had decided to branch out. The new restaurant was on the site of a former video rental shop which had become a casualty of changes in technology and consumer trends.

 

It was a splendid do. The past and current Mayors of Norwich were in attendance and so were around 120 other smartly dressed guests including the landlord. Not a bad turn out for a cold, dark Monday evening in November.

 

The guests were well fed with a variety of authentic Bangladeshi dishes. Speeches were made by a number of people including one by me on the significance the Indian-Bangladeshi-Pakistani restaurant sector in the UK economy — 70,000 people employed and a turnover of £4.3 billion.

 

At the end of the evening, when the guests had gone home a director of a local tea and coffee merchant was making a pitch to my friend. She had a big personality and had tremendous enthusiasm for her products – good attributes for a salesperson I reckoned. I was invited to join in the discussion about what sort of coffee should be available to customers.

 

My suggestion was that the product on offer should fit the Indian restaurant category rather than use a generic coffee from Africa or Latin America. “Well, we have this wonderful tasting coffee from South India—it comes from Mysore, in fact,” the sales director said. “After it is picked, it is left out and washed by the monsoon rains.” I told my friend that this was a fantastic story for a product and that it would be a wise move to include this item and the associated narrative on the menu. “I will send you some so that you can try it yourself,” the sales director told me as she handed me her business card.

 

She was true to her word. A few days later a small package with a handwritten label of “Monsoon Washed Malabar” arrived by post. And it really did have a fantastic earthy and spicy taste. But there can be no doubt that a very important part of my very positive experience of drinking the coffee was that that I had a picture in my mind’s eye of the monsoon rains washing away bitterness and acidity from the sun-dried beans. In reality, I have no idea whether this is true or not — but it’s a great story and fires up the imagination. In other words, it creates a brand.

 

When I later checked the price of the Malabar coffee from Mysore on the company’s website I noticed that it commanded a premium price. I may have been given a free sample as a potential customer but I was well aware that I wasn’t being offered any ongoing discount. Good marketing strategy, I thought.

 

The lesson is universal and applies from Brick Lane to Norwich to Mauritius.

 

The UK is certainly not out of the economic doldrums yet but there are signs of recovery (with Goldman Sachs forecasting that the country will enjoy the fastest economic growth amongst any of the developed economies in 2011).

 

One thing is certain, however: it won’t be too long before a lot of retailers and restaurants will wonder why they have managed to saddle themselves with all manner of discounted lines as the economy begins to turn in their favour. In other words, they have weakened their brand identities because of a short-sighted and short-term concern with the bottom line. In my opinion, it would have been much better to wait for the economic upturn and use some clever PR rather than price cuts to try and maintain market share.

 

The big lesson is that strong brands are well placed to survive economic downturns even if they take a short-term financial hit. By contrast a strategy of maintaining market share by aggressive discounting invariably weakens and in some cases ends up destroying a brand. This is not good for the general economy and it is certainly not good for jobs in any developed or developing country.

 

My advice: there can be little doubt that the future of the tourist industry in Mauritius depends on a sharply focused exclusive brand identity clearly differentiated from the middle and lower ends of the market (this also has the added benefit of preserving the environment, of course).

 

But as with food stalls in Brick Lane and coffee sellers in Norwich discounts should be off the menu. 

 

 

Dr Sean Carey is Research Fellow at the Centre for Research on Nationalism, Ethnicity and Multiculturalism (CRONEM) at Roehampton University