Pricing in an economic recession
For organisations of all sizes, an economic recession usually results is a call for reduced prices by the customer/consumer. Reduced pricing leads to lower margins , lower profits and less investment. The end of this cycle can be the decline of the organisation and, possibly, its ultimate demise.
But not all organisations seem to suffer the same. Indeed some seem to prosper. Why is this so?
Well, the reasons are many, but maintaining a viable pricing strategy is one key component of successful organisations.
Simply put, you can base pricing on ‘cost’, ‘competitors’ or use a ‘marketing based pricing’ approach.
The former two are self explanatory. But it is the marketing based approach that is most likely to deliver your organisation the margins that will allow you survive and even prosper in tough economic times.
A marketing based pricing strategy can be summarised by this quote from Ries and Trout.
- Understand your customers wants and needs.
- Deliver a positive personal experience with the product/service.
- Communicate recommendations from respected others.
- Instigate and encourage positive press and peer review from independent source.
No matter what you sell you can employ these simply tools to deliver outstanding results.