It’s Not The Economy

The economy may fluctuate, but people’s lifestyles and preferences don’t change. People will often pay extra for what they want, regardless of the state of the economy. In tough economic times, mid-priced products and services – those of average value – are often lost. Low-priced, low-value alternatives and high-priced, high-value options tend to thrive.

It’s not the intent to make light of trying circumstances. Instead, the goal is to provide all who are experiencing economic downturns whenever they may hit with the tools to minimize their impact on your business and your customers without lowering prices. If you want to send a positive statement to the market, raise or hold your prices when all others are lowering theirs.

In any Economy, Some Businesses will thrive while others suffer: When you’re in a business, you’re either growing or dying. The economy doesn’t affect that. If a business isn’t growing, it’s dying. The economy is a reflection of the conditions in a society. It’s an indication of the overall health of people and the country. Your business’s health depends on how you’re serving your customers, not on the health of their community. When you have a good product or service, it doesn’t matter what the economy is like because people buy necessities when they have to, regardless of the economy. If a product or service is important to the people who buy it, they’ll pay for it, no matter what the economy is like. The trick is to make your product or service more important to your customers than their other alternatives.

Understand your loyal customers better: People will pay extra for what they want: A big part of any marketing strategy is understanding who your current customers are and what makes their lifestyle so important to them. Then it would help if you used that understanding to attract new customers who are similar to those who are loyal to your brand. For example, if you know that your loyal customers are more interested in convenience than in cost savings, don’t lower your prices and thereby forfeit the convenience advantage you have over lower-priced alternatives. Instead, consider ways to bundle or unbundle your product or service offerings to maintain your perceived value without sacrificing price. Suppose you know that your loyal customers are willing to pay more because they see value in your products and services that they can’t get from less expensive alternatives. In that case, you can send a positive message to the market by not lowering your prices in the face of economic downturns.

Look at Bundling or unbundling product and service offerings: Bundling product and service offerings can add perceived value by giving customers more for their money. This can be done strategically to increase your perceived value and help you maintain or increase your prices. If customers are price-sensitive, consider offering a lower price without the bundled option. In the long run, this will help you retain or gain loyal customers by making your product or service offering more attractive. Unbundling is the process of providing only lower-priced options without the higher-priced bundle. It’s often done when production costs or supply-chain issues make a previously offered product or service less profitable. When you’re faced with the need to unbundle one or more of your products or services, you have an opportunity to make cost savings and use them to enhance your value in other areas.

Don’t lower prices to match the competition: This is a terrible idea. You’ll be sending an unmistakable message that you can’t compete with your existing customers on value. You’d be encouraging prospective customers to go to your competitors for their purchases by sending a clear signal that you’re trying to match their lower prices rather than adding more value to your product or service offerings. This is a surefire way to lose market share and make your business less profitable overall. The easiest way to lose your reputation for being a trusted brand is to respond in a knee-jerk fashion when your competitors lower their prices. You might get some immediate sales, but in the long run, you’ll be shooting yourself in the foot.

If you must lower prices, get buyer concessions: If you must lower your prices to remain profitable, consider getting concessions from your customers. For example, you might offer to extend the warranty length or offer a discount on servicing their products or a free training session on how to use them. This is an effective way to maintain your perceived value while reducing costs. If you must lower your prices, try to get something from your customers. This is a good idea regardless of whether your competitors are lowering their prices. Getting buyer concessions will help you to retain or gain more loyal customers, which is the key to growing your business.

Bottom line: Marketing is about more than just filling the bottom line with sales. It’s about building a brand that attracts loyal customers who will spend more and return often. In tough economic times, you’ll want to guard against the impression that you’re only interested in immediate sales. You don’t want to give the impression that you’re only interested in immediate sales. You want to show that you value your customers and their loyalty by protecting their purchasing power by not lowering your prices. At the same time, you want to show that you value your business and the profitability of your brand by finding other ways to lower costs without lowering your prices.