3 Small Business Marketing Price Promotion Tips

February 5, 2009 at 5:34 pm Leave a comment

retail-price-promotion

A competitor has just started a 50% off price promotion. What do you do; panic and do your own 50% off price promotion, ignore it or quickly work out what is best for your business and customers?

I am writing about this as I walking past 3 retail outlets today it looks like one shop quickly followed a competitor and the other worked out what was best for their shop and customer.

The interesting thing I noticed is that the shop that cut their prices to follow their competitor actually did not appear to have the same target market as their competitor.

Price promotions have their place in the big bag of marketing tactics; however the effect on your cash flow and profitability can be harmful.

Here are 3 tips for you to consider before following your competitor in slashing prices:

Know your customers
The obvious answer is that any customer can buy at a cheaper price, however if you know your customers well then this may not be a key factor why they are loyal to your store and return on a regular basis. One of the shops only had a small sign saying sale and they certainly were not offering 50% off as this was not going to increase their customer loyalty or improve their profits.

Know your business
For every dollar you discount you need to make up in the volume of the products or services you sell. If you have small margins this could potentially mean that you are not actually making any money on each sale which will affect your cash flow and profitability. In some cases you may actually be losing money on each sale which certainly means you could better spend your marketing time and money elsewhere.

Know your Competitors
If you really know your competitor’s business, then you have a better chance of understanding why they may be conducting the price promotion. It could be to get rid of old or slow moving stock, or in today’s environment they may be working to close down or it might be that they don’t have a loyal customer base so they need to attract new customers.

Today more than ever with small business marketing, you need to carefully consider how you promote your products and services to attract and importantly retain our key customers and stay in business. Remember, planned marketing activity will always be more effective than reactive marketing activity.

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Entry filed under: Marketing Tactics. Tags: , , , , .

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Susan

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