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.

‘All that exists in the world of marketing are perceptions in the mind of the customer or prospect. The perception is the reality. Everything else is an illusion.’
Ries and Trout – The 22 Immutable Laws of Marketing
The two largest expenditures most individuals make in their lives are on houses and on cars. Yet are these rational choices or emotive choices? Watch any of the many relocation programmes on the TV  and you will see it is definitely the latter. Maslow’s respected work on the ‘Hierarchy of Needs’ reinforces this.
Here are four things that any organisation can do to encourage emotive behavior in their customer and use this to maintain commercially viable pricing:
  • 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.

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