It's getting more expensive to do business. And whether you face direct challenges like spiraling costs for transportation and raw materials, or simply feel the secondary effects, you might find yourself taking a deep breath as you prepare to raise your prices.
In a post at Harvard Business Online, John Quelch offers his advice for the best way to handle the situation. Here's a sampling:
Invest in market research. According to Quelch, the assumptions you hold about your customers won't necessarily hold true. "You must get out into the marketplace yourself," he says, "and talk to consumers directly to understand their pain points and how they are changing attitudes and behaviors in response to price inflation."
Redefine value. In inflationary environments, Quelch says, customers think in terms of absolute price rather than overall value. In other words, they'll choose a 99-cent can of soda over one that offers 50 percent more volume for $1.29. Repackaging your product or service to hit key price points might serve you well.
Unbundle. While customers might have appreciated bundled pricing in the past, the most cost-conscious might now consider the chance to select stand-alone products or services.
The Po!nt: Says Quelch, "The key here is to educate the consumer, apologize for the uncontrollable price increases, give price-sensitive consumers some promotional options, and reemphasize product benefits."
Source: Harvard Business Online. Click here for the full post.
