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Sunday, December 14, 2008

Recession pricing

Here are some recession-smart approaches to increasing your marketing effectiveness, while controlling your costs.

Consider co-op advertising support
Many of your suppliers will help you out on your marketing costs if you are using their products/services. They may provide brochures, printed materials, or (even better) subsidize portions of your paid advertising in other media. They have good reason to do this: If you sell more of their products/services, they'll get more business. They may be able to also suggest where they've seen good marketing results in various media; saving you some trial and error costs.

Consider bartering or contra-trade, where appropriate
While cash is always king, and thus I am not really in favour of participating in organized barter exchanges or groups, direct trade makes sense when both parties to the transaction can benefit and the hard costs involved are low. As an example, we frequently trade advertising space for relevant trade show booths -- the trade show obtains valuable publicity, and we gain access to the show without draining our budgets (this is especially useful for our business because the other exhibitors, of course, can be future clients.) Recently, we noticed an advertisement for a local hotel seeking to promote itself as a spot to be used by contractors and construction crews. We have an employee who must visit the city every two weeks and stay in hotel. Not surprisingly, the hotel can see some value in exchanging space in one of its rooms for advertising in our publication; and we are happy to save the cash cost of the hotel rooms.

Encourage competition among your suppliers
Loyalty and respect are fine, but if another business can provide the same service at and quality at lower cost, should you not find the savings? your existing suppliers have choices in this situation: They can sharpen their pencils and reduce their prices, or create enough value-added services that you are ready to pay more (because you are receiving more value).

Raise, don't lower, your prices
This one is counter intuitive but you can often get more money for the same amount of work by ensuring you are delivering great value and service; often, even in the current environment, you may be underpricing some of your products and services. If you can raise your prices while your costs decline, you may be able to offset lower sales volumes with higher margins, and thus retain your profitability.

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