New Tricks?

[brightspark]

As we enter the phase of a market downturn, the company's that seem to be reporting healthy growth and sales/turnover figures could be classed as the "pile em high sell em cheap" end of the market (Poundland, Aldi, Home Bargains etc).

What lessons and business strategies do you think we as SME's can learn from these players, baring in mind we don't have their massive economies of scale.

[stockdam]

That people want what they perceive to be bargains or value for money especially when they think there's a storm ahead. Or they want to spend less?

I suppose you could say that a significant number want to buy at the cheap end. Maybe they still want their luxuries but are prepared to spend less on them and their essentials?

There still are people who want to buy quality goods that they think last longer etc. However they have probably cut down and are only buying essentials.

[StefanJ]

From an SME point of view, it's important to know if you're getting the best value for money from your current service providers - website designers, accountants, solicitors etc. We offer a free service at cmypitch where you can receive free no-obligation quotes from local service providers. Something to bear in mind if you're re-evaluating any of the services you currently use.

[Ashley_Price]

Cutting prices is not always the best way. This piece from a recent FORTUNE article (How to Manage your Business in a Recession) explains why:

Don't rush to cut prices.
Yes, everyone would like to pay less, especially in a recession, but the dangers of price chopping are greater than you may realize. McKinsey research finds that in a typical S&P 1500 company, a price cut of 5% would have to generate increased sales volume of 19% in order to pay for itself - and that almost never happens. The implication is that while holding prices steady may cause sales to decline somewhat, that course may nonetheless be wiser.

It all depends on the pricing dynamics in your business, which may be changing rapidly in this recession. For example, gasoline at $4 a gallon caused many U.S. consumers to cut back drastically on discretionary purchases; since gas today is below $2, some consumers may have more available income - but may also be more worried about their jobs. Now is the time to study price sensitivity in your markets much more closely than before.

It very much depends on the nature of your product or service. There will always be bargain hunters out there, but rather than dropping your prices or fees see how you can lower costs, or add value to your product or service.

We're now offering a free 1 week trail, which we simply could not afford to do before we had our own telephone system. At our old premises we were "piggy-backing" off someone else's system and they would charge us £100 for setting up a number (and then another £100 if we wanted it disconnected again)! So if someone took up the free trial and then decided not to continue it would cost us £200.

[brightspark]

In the current climate, as either your clients or customers are bombarded with "white noise" about the dire state of the economy, it is to get your message heard above this.

Ashley and Stefan, you both making sense to me. Looking at the current advertising the big players are putting out - very specific - this brand - this price statements. Maybe it is only the old loss leader but still the message (shop here - save money) is trying to cut through the white noise of doom and depresion. If M&S drop their "luxury food orgasm voice over" campaign in favour of "stay in spend £10 and this is what you get" then we can all take note.

Our clients and customers are that busy thinking the abyss might just be ahead that are they really listening when we are trying to provide them/sell them something? Maybe a very specific price orientated offer or promotion may get us heard above the crowd.

[Ashley_Price]

I don't want to turn this into blatant advertising, so I won't put the whole sentences. But to give an example, we're pushing the word FREE at the moment, as in:



FREE this!
FREE that!
FREE something else!

Get your XXXXX FREE!

We give you XXXX FREE!

What we've done is seen how we can add a lot of value (for free) at little or no cost to ourselves.