Times are tough – one only has to turn on the TV or glance at a newspaper headline to learn of the latest bad news. Consumer confidence has been hard hit by rising costs for fuel and food, and buyers are scrutinizing every major purchase. Everyone is trying to save money.
Owners of small-to-medium sized businesses are challenged in this economy to increase sales and profit when consumers are trying to decrease spending. The worst strategy is to slash prices across the board in hopes of making up the lost profit on higher sales volume. As Marketing Director for ActionCOACH, a global business coaching company, Jodie Shaw believes smaller companies are particularly vulnerable in a recession to predatory tactics by deep-pocketed mega-corporations.
“Wholesale price cutting is almost an act of desperation for the small business owner,” Shaw said, “and it plays right into the hands of bigger competitors. Knowing that smaller competitors do not have the financial strength to survive long-term on slim margins, bigger companies see price-slashing as a sign of weakness and increase the pressure.”
To retain market share, and even grow, during a soft economy, companies must remain focused on delivering value to the customer. There should also be ongoing reviews of internal costs to capture savings that can be passed on to customer’s without sacrificing profit margins. For retailers, Shaw recommends marketing strategies to woo value shoppers. Here are three tips she offers:
Announce Promotional Pricing
Rather than cut pricing across the board, with the resulting impact on the bottom line, market special promotions to attract customers in search of savings. Consider both short-term sales and new package options – maybe a new product bundle that extends a discount for the higher revenue. Analyze changing consumer preferences when selecting sale products.
Rethink Coupons
A throwback to last generation – coupons – are catching up to technology. Almost 60% of consumers responding to a survey by consumer marketing experts ICOM believe they would use coupons more - if they digital, not paper. The venture capitalists were listening, and you should be as well. Connect online now to build your customer data base, so that you will be prepared to connect via their frequent shopper RF key fob in the near future.
The Internet Gets High Gas Mileage
The price of gas has changed the way Americans shop – again. We make fewer trips and look to combine trips when possible. Buyers are driven to transact as much business as possible online, it’s no longer an option. Now would be the time to upgrade the company’s web site to improve usability and value marketing.
When the going gets tough, the tough don’t announce a fire sale. Focus on service and value, but seek opportunities to capture cost savings that can reduce your prices without reducing profit.
