Product, pricing and profitability in a changing market

In an article in the Business Section of the Sunday Times, Rachel Bridge looked at the vital importance of getting the marketing mix right for businesses struggling to survive the downturn in demand during the recession. The focus is on product, pricing and profitability in the changing market place. One point, that tends to get forgotten in market research, is the value of talking to those who are not currently customers as well as those who are. There are some excellent examples in the article, from a jeweller who introduced a new, cheaper range in order to allow customers attracted into her shop to find something affordable rather than leave empty-handed, to a couple running a pet and house minding business which has launched a “business in a box” to enable people to set up on their own just like they had. For a one-off fee of £6,995 plus VAT they supply a manual, a website, two days of training and the right to set up a similar business in a specified region. The article concludes with some key lessons for reviewing the marketing mix: - Consider introducing a cheaper range to appeal to more cost-conscious customers but make sure it does not damage the image of your business. - Be wary of marking down prices of existing products to attract customers. Once lowered, prices are very difficult to put back up. - Don’t continue to sell products or services purely for sentimental reasons. If they are not in demand, or they don’t make a profit, ditch them. - Get a clean sheet of paper and write down the ideal product range for the market you are serving. Then work out how to adjust your range to mirror this. - Don’t make decisions in isolation — ask your customers what they think of your product range and what they would like to see more of. - Work out the profitability of your products. It may no longer be enough to justify stocking them. - Review the way you sell your products and services. Can they be ordered or delivered online? Is selling them wholesale still the best way, for example, or should you be trying to build a brand of your own?