Almost for the entire retail market, summer season means sale, discounts and promotions. The financial crisis forced us to lower our prices below the norm. We can’t afford to go lower one more time. And if we don’t, competition will. We’re stuck. What do you think?
Once upon a time, there was one grocery store in each neighborhood selling soap, cheese, bread and oil. When customers wanted soap, they asked for… you guessed it, soap! There were no ‘brands’. But then, competition got involved and ‘brands’ were developed to help customers differentiate between products. With time, customers couldn’t see the difference between these products so they went by price. This is where the first war price was ever born. As prices started to go down, maintaining healthy margins that can help the companies to grow became almost nonexistent. When the situation got so unbearable, brands focused on adding more value to their products so they can justify increasing the price.
Slowly, the rest of the market started to follow and before you knew it brands were competing on benefits and features, value, lifestyle and experience. This cycle repeats itself every now and then for different reasons and influences. This time, it’s the financial crisis that caused the dip in margins. If you want to get out of it, don’t focus on price. Focus on introducing new products, adding more value and on developing unique customer experiences. And if you feel that a promo is an avoidable, make them fun and engaging so that customers gladly pay you…and that’s just my two cents.