Whether or not there is a dip in the economy, you have stock on shelf you need to sell. But, if consumers are cash-strapped, you have to make every effort to ensure that your franchisees aren’t running at a loss.
“There’s no doubt that shoppers are more discerning about what they need and how they shop. However, quality remains significant and brands that continue to delight their customers will reap the benefit of being chosen,” says Ailsa Wingfield, executive director marketing and communications: Africa, at Nielsen.
Why not give customers the best of both – value for money at a competitive price – by applying one or more of the following pricing tactics in tough economic times:
1. Consider a greater focus on your house brand
“The days of in-house retail brands being treated with a fair amount of disdain by South African consumers have come to an end,” says Wingfield.
The global performance management company’s research has found that R38.4 billion of the amount consumers spend at hypermarket and supermarket tills – or R10 out of every R50 – is spent on private label products. South African consumers are beginning to feel that the quality of these house brand products is as good as that of established name brands.
Since research indicates consumers are further likely to shift between branded products and retailer private label offerings, it would be of benefit to your franchise if your in-house products are perceived as viable value alternatives of similar or better quality.
2. Sell products in bundles
This the method combining various products and selling them together as one bundle for a lot less than if they were being sold separately. This method is great for moving items that might be selling slower but also great for achieving a higher value perception in the minds of consumers.
CEO of GuruShots, Gilon Miller, says there are several bundling techniques you could apply, including:
- Pure bundling, where you offer a group of products that are only available as a bundle and aren’t sold separately.
- Mixed bundling, where you offer products that are sold both as bundles and as individual units.
- New- or lesser-product bundle, where you bundle a successful product with a newer or less successful product – the stronger product will help the other product find its way into a new market.
Bundling results in cost efficiency, more competitive pricing and might also encourage customers to regard a single store as a source for several solutions.
3. Add even more value
When you price your product in alignment with the value your customer sees in it, you’re preventing both you and your customer from the possibility of losing out on value.
Calculating your optimum price, involves asking yourself these questions:
- Will your customers save money or time by using your product or service?
- Is your product or service is unique?
- Will your product or service help customers gain a competitive advantage?
- What does the competition charges?
“Value-based pricing ensures that your customers feel happy paying your price for the value they’re getting,” says Patrick Campbell, co-founder and CEO of Price Intelligently. “Pricing according to the value your customer sees in your product prevents you from short-changing yourself while creating an experience for customers that’s most aligned.”
The more value your customers see in your product, the more they will be willing to pay for it, ultimately improving your bottom line. When your pricing is reasonable, they won’t need much convincing to make the purchase at your franchise instead of your competitor’s.