Small Firms Under Growing Pressure to Cut Prices

Small businesses, especially independent retailers, are under tremendous pressure to cut their prices as competitors slash theirs and consumers stop spending, according to marketing experts.

[UKPRwire, Mon Mar 02 2009] Many firms are reacting to the recession by discounting heavily to attract cash-strapped customers, but reducing your prices can do more harm than good, according to the Chartered Institute of Marketing.

“If you reduce prices too much, you will create the impression that your product is cheaply made as well as cheaply priced,” says Mark Stuart, expert on small-business marketing advice website Marketing Donut, and head of research at the Chartered Institute of Marketing.

“The focus should be on finding out how you can ensure customers buy from you, instead of someone else, rather than just concentrating on price,” he adds.

“If you must discount, make sure the cuts are communicated as special offers, or one-offs to help loyal customers through difficult times,” continues Stuart. “One day you’ll need to increase prices again, which could be more damaging to your long-term survival than avoiding price cuts now.”

Stuart points out that while price is becoming an important differentiator, small businesses should also promote the things that make them special. “You need to ensure you have a unique selling proposition and focus on communicating that to your customers,” he says. “The trick for your own growth is to find ways of making the product or service you’re selling less price sensitive.”

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