I was of the understanding that the purpose of offering a discount or promotion was to encourage customers to come into the store and buy things, or, if they were already buying things, to buy more.
One manager I had, however, decided to arbitrarily offer high-volume, non-returning customers a discount so they would be paying less for items they were willing to pay regular price for.
This store was occasionally visited by a tour group sponsored by a company that took visiting foreigners on shopping sprees. The tour groups generally consisted of people from countries where our products were in high demand, were hard to find, and were several times more expensive than our prices. The tourists rarely spoke any English, and tended to politely avoid the staff. They were on a strict schedule of one hour per store, so when that hour was nearly up, all of them would simultaneously line up at the cash registers with armloads of items, pay for their purchases, and leave, never to be seen again by us.
Needless to say, the staff was always delighted when a tour group came walking through our doors. For about an hour our store would be flooded with a few dozen people who required little to no help, bought great quantities of product, and were leaving the country in a few days thus would be unlikely to return or exchange anything. As a group, they'd often spend enough money to equal one to three days' worth of our sales goals, and in slow seasons, they'd were often the difference between the store making its weekly or monthly sales targets.
A new manager joined our store, and arbitrarily decided that customers who came in as part of one of these tours should be given a significant percentage discount on all their purchases. He instructed staff to tell all tour group members that they'd be receiving this discount.
Staff attempted to explain the discount to the tourists, but the tourists spoke another language and did not understand. The tourists continued to buy large quantities of items, but now received a significant discount.
The few other customers in the store, however, were either mistaken for part of the tour group and accidentally given the same discount, or overheard staff explaining the discount to the tourists and demanded the same deal. Eventually, staff stopped trying to explain the situation, and for an hour they'd simply ring through everyone in the store with the same discount without explanation.
Again, the purpose of a promotion or discount is to encourage people to come into the store and buy things, or, if they are already buying things, to buy more. The purpose of a promotion is *not* to get the customers to spend less money.
In this case, however, the promotion neither encouraged the tourists to buy more nor to return and shop again. In practice, the promotion turned out to be this: when a tour group arrives, every single customer in the store gets a limited-time-offer percentage discount off all their purchases. I am unsure of how this deal encouraged the customers we couldn't communicate with to buy more things, or how it encouraged people who were from another country to return and buy more in the future, or how it in any way helped us to gain new customers or sell more things.
In fact, the only thing this promotion seemed to do, was reduce the total amount of dollars the tourists spent.