Critical tips from today’s news
Tempted to cut prices? You’re not alone. With slumping sales, many businesses have been quick to offer discounts. “Cutting prices is by far the easiest marketing technique you can use,” says Frank Luby, a partner in Simon-Kucher & Partners, a pricing and marketing consultancy. But price cuts raise some tough questions: Will deep discounts cheapen your brand? Once you cut prices, can you raise them again? How do you deal with narrower margins? Says Luby: “I try to get my clients to think about where they want to be as a brand when things turn around.”
Here are three companies that made big pricing changes and the results of those decisions.
Jeremy Shepherd started to get concerned last summer. The founder of PearlParadise.com, an online retailer in Los Angeles, Shepherd noticed that sales of high-end pearl necklaces were slipping, and he worried that might foreshadow a dismal holiday season. The company relies on sales of $1,000 to $5,000 pearl necklaces during the crucial end-of-year months, which typically account for about 40 percent of annual sales. But though Web traffic was up, many customers were favoring jewelry priced well under $1,000.
Instead of promoting his higher-priced items, Shepherd decided to boost sales by appealing to his customers’ thriftiness. He created a “luxury for less” campaign and priced his strands of Tahitian pearls, which usually sell for $500 to $700, at $300 each. Then Shepherd spent $75,000 to promote the sale. He also revamped his website, placing lower-cost items on the home page.
Orders began to pick up. …read more at Recession Pricing Strategies – How Low Can You Really Go? – at Inc.com, published 1 March 2009.
Flickr photo credit: Harpersbizarre
In 2008, entrepreneurs Chris DiMambro and Keith Dupuis sought to upscale their Main Street Grill, a sports bar and family style restaurant in Weymouth, Massachusetts. Their $48,000 risk–in seemingly positive changes that included an expanded menu, flowers on the table, linen napkins, and even new salt and pepper shakers–so angered their regular customers that, after 9 months, the pair had to acknowlege a flop. Disheartened by the empty seats, angry customer letters, and a 15 percent drop in revenue, the two look back in this MSNBC video to what went wrong and the lessons learned. Says MSNBC in summary, “to keep the customers you have, you need to be in touch with what they’re looking for.”
See the video below and a related, more positive piece from the Boston Business Journal, 3 February 2009.
Flickr photo credit: gregs stuff
Last week we ran an article about the various characteristics of a good client. This week, we’re going to look at the other end of that: ten different types of bad clients, and what you can do to avoid them.
If you’ve been freelancing for long, then there’s no doubt you’ve read some of the horror stories about bad clients. You may have even run into a few bad clients in your own business.
Over the years, I have noticed that most bad clients seem to fall into certain common patterns. In this post, I share those patterns with you. Keep in mind that none of these bad client types are specific to any one client that I’ve ever worked with. Rather, these examples are a generalization of the many different characteristics a bad client can take. Personally, I rarely ever have to deal with a bad client in my business, and I’ll explain how you too can avoid them later on in the article. …more at 10 Types of Bad Clients and How To Avoid Them – FreelanceFolder, published 17 March 2009.
Flickr photo credit: marblegravy