Times are tough, and cash is tight. This doesn’t mean though that people’s needs, wants, and demands changed all that much. They still need, want, and demand those comfortable cars and subscriptions to their favorite gym so they can work out each morning. Their purchasing requirements and expectations have changed though; they need payment plans and options that won’t form a drain on their monthly disposal income and cash.
It is in times like these a brand can capture valuable market share by adjusting the Product and Price elements of the marketing mix to provide customers with what they want, need, demand, and can purchase.
This is not something new and has always been around. That’s exactly why banks are doing so great with credit cards, even at a relatively high monthly interest rates. They provide consumers with a way of buying the things they want, but couldn’t otherwise. Just consider what happens to credit card balances during the summer season or around Christmas time.
At the same token, look at the automotive industry; does it really make financial sense to purchase a car with only 5% down and a 10-year loan? By the time this is all paid off, the consumer will probably have paid for the price of two cars. Yet people buy cars every day with these bank loans to enjoy driving around in comfortable and safe vehicles.
Ease of payment
A consumer’s needs, wants, and demands don’t change just because times are tough. Their purchasing needs have changed though, which is why you – the retailer – must find means and ways to eliminate entry barriers. Those are usually high upfront payments consumers don’t have or can’t afford. No matter what it is that you are selling, if the barriers to buy your offerings are removed or drastically reduced, you will see more of new and repeat business.
This means that you will need to make some changes to your pricing structure. One-time payments are a no-no. Break the total cost down over monthly payments with multiple options. So for example, if your business is a gym, give people the choice between monthly, quarterly, semi-annual, and annual payment options. The total annual cost must of course increase with higher payment frequencies to encourage people to make fewer payments, but they must see these options being readily available.
Business supports marketing
When discussing payment options and plans with clients, we are often confronted with the argument that collecting monthly payments is a hassle and frequently generates bad receivables. Be that as it may, it is the role of business to support marketing as much as it is the other way around. If payment options help increase sales, business processes must be able to support that in happening. And if the price needs to go up a bit to accommodate for potential bad debts, so be it.
You can build out your payment options via a number of ways; you can for example start accepting credit card payments, or you can strike a deal with a bank to provide discounted loans for specifically your customers. And if you’re in a high-volume retail business, you can even go as far as co-branding your own credit card with a bank for extra exposure of your brand.
Breaking down your product
Building and offering the best product with all the bells and whistles is futile. Not all people need all options and features. The best example for this practice are software companies. They typically offer premium, pro, and basic versions of their products. The differences from one to another are the number of features made available in each, but they are all basically the same.
A student for example can purchase Microsoft’s Office 365 for as little as $9 per month, while a corporate business user will pay $20. The latter will of course needs Outlook which is excluded from the former. Students are most likely to access their email via web browsers anyway. And they don’t really have a need for sophisticated tasks and calendar management tools, so why attempt to sell them something they won’t want? By offering a low-cost version of those tools they will need, Microsoft has effectively tapped into a huge market segment which could otherwise not afford their fully fledged product.
The same approach is used by car manufacturers, whereby a given model could range from JD15,000 – 25,000 depending on the features the buyer chooses. Again, the idea here is to not lose a customer by asking him/her to pay money for options and features that are neither needed nor appreciated.
We often write about bundling because we really believe in this approach. By bundling, you attempt to sell more products or services, but at a gradual pace – the buyer’s pace. This has proven to be an extremely effective strategy for several industries, such as telecom service providers and software companies. But we are most confident in that it can be adapted to your particular case as effectively.
Again, let’s look at an example here; say you’re in the business of selling computers and accessories. Your basic laptop sells for JD350 and comes with a case only. You can advertise that you sell laptops for as little as JD350 which will bring in foot-traffic, but you can increase each sale easily by another JD65. In this case, you would offer the buyer – once he/she finalizes their decision and are almost at the cash register – to buy a mouse and protective case for another JD65, which would otherwise cost JD100 if purchased separately. Being protective of their new purchase, customers will most likely agree and you just increased your sale from JD350 to JD415.
Conclusion; get out of your comfort zone
For business purposes, it is of course much easier and more comfortable to design one superb and all-inclusive product or service, price that, collect a one-time payment, and move on. Well, this is not how it works these days. There is no such thing as one easy way of doing business with all customers. A brand must segment its market, design specific products for each, price those, and then promote those for the highest impacts.
About the Author
Pinnacle Business & Marketing Consulting is a results-driven boutique consulting firm that specializes in providing clients with practical and pragmatic solutions to their business and marketing challenges.
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