I have always told my customers that they should not competing on price. That their goal is to rise above price by showing the value they give to their customers.
But (don’t you hate when I say but) after this pandemic, we will see many businesses increasingly compete on price.
When we “come out of this”, we will see a new normal. A world that is more hygienic, less likely to shop in retail stores, more inclined to digital, maybe even a greener society.
We will also see consumers having less money to spend. They will be looking at the cost of things in a way we haven’t seen since the 2008 financial meltdown.
That means that as business owners and marketers, we need to rethink how we price our products and services. And, how we present that pricing to the public.
This is all about perceived affordability.
Here is some food for thought about competing on price as we move towards a recovery.
Temporary price reductions
Everybody likes a discount. Certainly you don’t want to devalue your product or service permanently. A temporary price reduction may get people in the door. This is also a good way for you to get rid of excess inventory and clear the way for new merchandise.
Cash back offers
Giving cash back at the end of a sale is very effective. Per Wikipedia, a cashback reward program is an incentive program operated by credit card companies where a percentage of the amount spent is paid back to the card holder. Many credit cards and retail store also offer cash back options. This is also widely used in the auto industry.
Give extra value to consumers
Remember, this is not about you – it’s about them. What would make someone feel more “kindly” to your product? Can you give them 6 months of free service? Can you offer an extra bottle of lotion when they buy 6?
What about a BOGO? BOGO is a way of encouraging more sales of a product by offering customers another item of the same type, free or for a reduced price. BTW – BOGO stands for “buy one, get one free”.
Or, consider a GWP – Gift with Purchase. This extra value incentive was pioneered by the cosmetic and beauty industry. Every woman understands Gift with Purchase. Many people have been encouraged to buy items they didn’t need yet to take advantage of the free gift.
Expand loyalty programs
A loyalty program is a marketing strategy designed to encourage customers to continue to shop at or use the services of a business associated with the program. Today, these kind of programs cover many types of commerce. Most of them having varying features and rewards schemes, including in banking, entertainment, hospitality, retailing and travel. Traditionally, loyalty programs have been extended to the big-time spenders. Maybe you can expand your loyalty program to people who purchase small amounts frequently.
Offering credit to your prospects can help change a no to a yes. Examples are: Buy now, pay in 2 years. Low, no interest payments. In terms of marketing, businesses that are considering extending credit may want to target only those consumers who will meet their credit requirements.
Experts indicate that the Recovery process may take a while. Many consumers have lost their jobs or have shortened hours. For businesses that can offer credit, this may be a great way to get products out of their inventory and into consumer’s hands.
Your job is to get those sales in the door so you can continue to operate. But, you always have to keep an eye on the market and your competition. Even when you’re competing on price, the last thing you want is to be involved with is a costly price war.
Remember, excessive promotions lead consumers to revises their expectations about your prices. For example, I shop at Bed, Bath & Beyond. I am used to getting that 20% off. If I don’t have the 20% coupon, I won’t shop with them. On the other hand, I am happy to buy items I know are over-priced, so long as I have the 20% discount.