Confidence is in short supply and money seems to be equally scarce. It's tempting to think that every consumer in the West Midlands is going to be looking for the lowest price and search for ways to cut costs and margins to become the cheapest amongst the competitive set.
However, I urge you to consider the following before taking such drastic action:
- Focus on value not price - customers buy on price when they perceive no other relevant difference. Even in a recession, the rule holds. What changes is how customers judge value; in other words what is relevant.
- Service and customer relationships are still important. When we are surrounded by bad news and the future looks bleak, being 'looked after' and treated properly can be even more noticeable. This is especially true if competitors are visibly reducing service levels in order to fund price reductions. We love the new Norwich Union TV advertising, offering to compare their prices with their competition, even if the competition is cheaper. It's a great statement of confidence in their product and value plus an absolute transparency which I'm sure their customers will respect.
- New opportunities - changing customer priorities will create new opportunities. For example, DVD rental shops are seeing a significant increase in business as customers shift from a trip to the cinema to staying home with a good film. The rental shops haven't had to cut prices to achieve this.
- What happens when the recession is over? Of course short term survival is critical, but for most businesses there will be a recovery and we need to think about our strategy to take advantage of it. if we cut costs, staff salaries and customer service now to fund a price cut, will our suppliers, staff and customers be ready and willing to help us when the good times return or will they be looking elsewhere?
However, it may be that price cuts are the right strategy - the real key is to understand your customers & their changing needs in the current climate. There has never been a more important time to establish and maintain a dialogue with customers. Aardvark Marketing Consultants have significant experience in helping businesses find out what their customers think - for a free discussion please send us an e-mail or call Chris Hutchinson on 01905 622 206
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