While the strategy can help lure hesitant customers, high costs run the risk of leaving some companies worse off
Faced with a deepening recession and evaporating sales, an increasing number of small businesses are resorting to a high-risk strategy: costly giveaways and promotions to lure the reluctant consumer.
If the strategies work, these companies could have a powerful weapon in their struggle to weather the economic storm. But if they don’t work, the more vulnerable businesses could find themselves in a bigger financial hole.
“Offering things for free is a very dangerous area to get into” for little-known small companies, because it threatens to establish the brand’s reputation as cheap, says Barbara Apple Sullivan, managing partner at New York communications strategy firm Sullivan & Co. “Clients or prospects [may see] the product as worth what they’re paying” during a promotion, she says.
But, she adds, the promotions can give the companies a shot of finding new customers — something in short supply right now. …more at Small Firms Resort to Freebies and Special Deals – Wall Street Journal (http://online NULL.wsj NULL.com/article/SB123378641759849447 NULL.html), published 2 Feb 2009
Flickr photo credit: mitchiru (http://www NULL.flickr NULL.com/photos/mitchiru/3025454986/)
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