Impact of Recession on Product Pricing
Pricing strategies for recession : Heavy discounting is not the way forward
During good times and when things are rosy, pricing is usually okay and not really harped on. But during times such as these when inflation is soaring and people are being careful with the way they are spending, a wrong pricing strategy can kill a brand.
When sales drop, the immediate reaction is to cut prices, but this is not the best strategy. Price cuts at times like this can affect the company’s profits when the market again goes back to normal and will be really difficult to get back to profitability. Also, this kind of process can hamper the brand value which took decades or years to build
We from uniQin.ai suggest the following
Understand your competitive advantage: Steep discounting is never going to help you during a recession. Large corporations can play this game as they have deep pockets. But if you are a small to medium company, make sure to never go below certain price points.
Work on your customers and create segments and work through them: Create segments of your customers as HNIs, Middle Class, and Budget sort of buckets and work through them. With this getting best service and low discounts and so on. Dynamic pricing is the only way forward and all should adopt this quickly
Keep your loyal customers closer: Work on your customer base and keep them happy.
Stop revenue leaks: If your marketing spend is too much, then maybe it might be great to put control on it. Also, you may not need super expensive brand ambassadors if you are not a big corporation already.
Rework your sales targets: Change your pricing strategies, instead of pricing based on values, better to shift based on competitors, costs, or customer-driven. Also, work on new sales targets for your sales team
Get experts to price your products: Your earlier way of pricing is not going to help you. You are going to need an expert to do this pricing during times such as this.
Remove nonessential features from your product to cut costs: Remove items from products that could be hiking costs. Keep the core product and shed the rest
Understand your product: Necessities, good to have, luxury items, not really needed at the moment
Plan long term: You should just manage to keep alive during this recession, so you are still standing when all this is over.
Plan your communication channels: Thanks to social media, a lot of the work can be done with minimal cost. Plan it well
Control inventory better real-time based on the movement of products with minimal wastage
We can probably help you with your pricing if you are an eCommerce company selling online or a retail brand selling online and offline. Please reach out to us to know more