Retailers, of course, always are thinking about ways to increase profits; usually, they will do so by trying to boost sales or cutting costs.
There is another alternative, raising prices.
Companies must get back to basics to determine the best course of action. It is important to recognize what management expert, Peter Drucker, stated: customers do not buy products, they purchase the benefits that they hope the product would bring.
Most of us have witnessed the absurd surge of shoppers who wait all night to enter a store when the doors open at five in the morning on Boxing Day when prices are slashed drastically.
Retailers should try to identify the motivations of customers. Some shoppers are impulse buyers. They see a product on display and then just decide to purchase it for a variety of reasons. They may be attracted by the exhibit, or something about the product catches their eye. Impulse buyers rarely consider their needs or what advantages they believe the product will generate.
Others shop for the sheer pleasure of buying something, an act that makes them feel good. Lots are lured by the advertised price reductions; in other words, the appeal of a bargain.
Many retailers depend on rising sales volume, which is difficult in the current competitive environment and with so many strapped for cash. As for cutting costs, in this highly challenging period, most retailers have done so and are unable to do more.
That leaves only prices. Ingenious pricing may be used to take advantage of the spending power that is available.
Makers of high-tech products may decide to add new features that then can push up prices – for example, a smaller version of a smart phone or a carrying case. Luxury goods may appeal to snobbery, making high prices more acceptable because a product is so exclusive.
Setting prices, promotions, or discounts, must be important decisions not left to anyone other than top management. They would be in the best position to make those kinds of calls.
Slogans may appeal, such as one-third more or 25% off, the same thing. That may entice buyers; all like good value.
In this aggressive retailing environment it is essential that management consider unique options. Otherwise they will be bypassed. Then too, costumers should make it known why they are making a purchase. It is just an impulse or belief that it will serve a useful purpose?
At this time it behooves us, shoppers and retailers alike, to “smarten up.”