As this shopping season draws to its conclusion there are winners and losers. The winners, for the most part, are those that have changed their pricing strategies to fit today’s economic times and promoted their changing policies aggressively. The losers seem to be those who approached the season in the same manner as they did when times were much better. Consider the jeweler who was known for his creative skills using gold, but when that metal became even more precious customers stopped buying. So the jeweler shifted a much larger proportion of his offerings to silver — same creativity, same craftsmanship, lower prices and higher sales volume. Consider the family restaurant that discovered that an increasing number of customers wanted to share one entrée instead of ordering two, either to save calories or money or both. Instead of not allowing this request, it created new menu items “for the lighter appetite.” The smaller portions were less expensive than regular portioned meals, but higher priced than one meal split between two diners. While the average sale is lower than before, it is still higher than the single entrée and it is surprising how many people then order two desserts. A distributor that normally charges customers a delivery charge instituted a new pricing policy that offered free freight for all orders higher than 30 percent more than the average sale. Customers have increased the size of their orders to take advantage of this offer while the costs of “picking and packing” have been reduced, almost offsetting the cost of absorbing the shipping charges.
A critical factor in developing a promotional pricing strategy is to learn what customers want or need or are willing to pay for and then figure out how to grant them their wishes. If you can do that you might be able to actually increase sales volume and become a winner. If you don’t try, you probably will be a loser and may not be around to profit when the economy becomes more robust.
As you plan for the next season, consider what your customers want or need then start thinking about price creativity.
By Larry Galler – Times Business Columnist