Recession-proof Your Pricing Strategies
If you would like to recession-proof your business, Marketing and Business consultant, Ruth Klein shares some keen insights, among them: think value not pricing.
The first instinct in a recession is to slash prices to keep customers coming, but that's no remedy if it threatens to destroy your bottom line. Instead of thinking discounts, consider "price packaging" strategies that will show consumers you offer the best value.
The marketplace can't tell you what to do. The signals definitely are mixed when it comes to how the marketplace sets prices. Discounters are doing well, and so are those who offer highest-priced goods and services.
First-quarter reports this spring showed that discount retail chains like Wal-Mart Stores and TJX Companies fared better than full-price retailers such as Macy's and Kohl's when it came to sales and profits during the first three months of this year.
The segment that caters to business with those labeled 'super-rich' is doing a stellar business for luxurious goods and like service offerings. More expensive import car-makers are faring better than makers of lower-priced domestic cars.
What does that mean for how to recession-proof your business? Consider the worth of your offerings and ignore what you charge for them. How you package your prices or fees is what will establish your brand as the smart value during an up or down economy.
If you package your products or services in a way that shows they are a good value for the price, then you are establishing a pricing strategy that answers the challenge of serving a demographic that is worried about this recession.
If your goods or services are designed to serve a luxury market, establish a pricing strategy that incorporates the words "smart value" in your marketing language.
Here are a few examples of how to incorporate price-packaging strategies to best serve your market:
- Think 'smart value.' Consumers would rather think in terms of a 'smart value' than 'cheapest' or 'most expensive.' Point out the smart value of what you bring to the marketplace, and phrase your marketing message to reflect that what you offer is the best value available for the price you are charging. High-end retailer Tiffany & Co. incorporates that strategy and so does budget-minded Target.
- Bundle up. Re-packaging goods or services, or bundling, can create a new way to do business without changing your basic price points. Can you offer two complementary products or services as a convenient (Remember: saving time equals saving money!) service to your customers? Product bundling has been very successful value-management for Dell Computers since the beginning of the company. What do your customers need to "go with" your products or services. Your bundling does not have to incorporate in-house strategies only. Luxury hotels have long partnered with luxury travel and/or adventure firms. Is there a complementary business that can be bundled with your luxury product or service as part of your price packaging strategy?
- Think extras. Consider adding and marketing 'extras.' If you offer seminars, can you offer the extra of a free e-newsletter subscription or mini-seminar?
- Embrace the I-cushion. Your I-cushion in this market is the Internet. Numerous studies have confirmed that bargain-hunters and high-end spenders alike are turning to the Internet in higher numbers each year to "shop" for goods and services. Don't scrimp on Internet marketing this year.
- Think 'unique.' Ultimately, what is unique about your business will count more than price. Your individuality is one of a kind, and THAT is what should show in how you market. What is different about your product or service?
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ABOUT THE AUTHOR
Ruth Klein is a branding, marketing, publicity and time management consultant to law firms and business professionals ranging from solo entrepreneurs to the Fortune 500. As an award-winning business owner with a master's degree in clinical psychology, Klein brings her unique, results-driven insights, expertise and practical solutions to her law firm clients. For more information, visit http://www.ruthklein.com .