Pricing and promotions are tricky to get right during recessions. Lower prices often guarantee only one thing — lower margins. And customers will expect those low prices to remain once the economy recovers. Otherwise, they’ll be looking for new vendors. Yet doing nothing is almost certain to drive business away.

Lowering prices is “the easiest short-term tactic to do to hopefully gain revenue. It’s an easy tactic to do to tell your customers that you’re being responsive to the downturn in economic times. But there’s a huge number of problems with dropping price,” says Wharton marketing professor Eric Bradlow.

So what should small- and medium-sized businesses do?

Learn the best way to handle pricing and promotions in an economic downturn from Knowledge@Wharton, the Wharton School’s online business journal, in this conversation with Wharton marketing professor Eric Bradlow.

 

 Pricing in a Downturn - Eric Bradlow [8:11m]: Play Now | Play in Popup | Download

My own small business story is just starting back up after being placed on hold for two years. A partner and I formed a personal organizing business in a small city in Florida, and despite our best networking efforts, not enough people were willing to pay for our services to make the business viable. Ironically, because it technically operated in the black, we held onto it for a long time, hoping that we were approaching the “hump” past which our sales would pick up momentum. But eventually both of us were deeply in debt because we were using credit cards and loans to pay our personal bills.

I’ve spent a long time since then trying to figure out if we could have done anything differently, or if we should have held on just a few months longer. But the thing that probably hurt us the most was the market — our prospective client base was too small and didn’t have enough disposable income to drop a thousand (or two) dollars at one time. We could pick up jobs here and there, but not enough work to make a living.

Since then, I returned to the industry I have the most experience in — administrative work. I can make a regulated income to ensure my monthly expenses are covered, and taxes and insurance are far simpler. But I miss several aspects of having my own business, and recently when my car began to show signs it was time to replace it, I realized I was going to need to get a second job. After considering several possibilities, I decided I was going to start up an organizing business by myself. I face a lot of the same challenges as before read more

They say “when life hands you lemons, make lemonade.”  The same philosophy should be applied creatively by small business owners to take advantage of the financial conditions and possible slow down in their businesses.

Any event that generates extra time for a small business owner is a gift that should allow time to reflect on the business and think about business and personal growth plans and taking the business to the next level.

There are a myriad of ways to enhance a business when one finally has the time to give the project full attention.  For example, a slow down in business opens up time for the owners to modernize marketing materials and technology, to cross train their employees for greater flexibility, or to shore up their own capital either by accepting an open line of credit or accepting the many offers of new business credit cards that arrive daily for businesses based on sound financial footings.

These ideas are not unique to any one industry, although I apply them to the solo law practice I run, and I previously owned a small law firm that navigated successfully through the last economic slow down/market crash.

Protect your business read more

Learning how to market your business and close sales can be the toughest part of running a business. Most of us start a business because we happen to be good at “something.” We started a business because we were good at accounting, or landscaping, or building houses, or freelance writing, or software programming, or Web design.

But chances are, we are not that great at sales and marketing. Heck, you can’t be good at everything, right?

Unfortunately, no sale = no eat.

But if you want to boost your marketing by 100% and make it easier to get sales, try this one little technique that anyone can learn to do … read more

Not so long ago I was a video naysayer.

Oh, online video sounded great if you had a “video-worthy” consumer product, such as T-shirts with funny logos. But not for the typical small business in the mainstream in the United States — the retail establishments, manufacturers, medical professionals, engineering firms, CPAs and others. The chances of those kinds of businesses getting any traffic or new customers with video seemed remote. Or so I thought.

But — I have changed my view. One reason is that Google has integrated YouTube videos aggressively into the regular search results. Now there’s identifiable value from videos. By creating a video and hosting it on YouTube, it gives your business an extra shot at getting listed on the first page of the Google search results. Your company’s Website AND its YouTube video could both appear high up in Google. read more

The online marketing landscape has become so complex that cutting through the “noise” is now one of the biggest problems small businesses face. Sorting out WHERE and HOW to spend our limited time and resources is increasingly the challenge.

So Many New Choices

Part of the problem is that we are bombarded right and left with new choices.

Search engine optimization (SEO) has taken on a much higher profile as the number of indexed Web pages balloons and it gets harder to be found in search engines like Google. The search marketing industry is now in the multi-billion dollar range. Not only is search growing, but it is increasingly being broken down into distinct specialties, such as local search, paid search and mobile search marketing.

Affiliate marketing has become big business, too … a more-than $6 Billion a year industry.

Blogs, YouTube, Myspace, Facebook, LinkedIn, Twitter, and every manner of social media site are discussed ad nauseum. Yet, many businesspeople do not have the time it takes to investigate these social media sites. Most people have only the vaguest idea what these sites do or how to use them — perhaps just a nagging sense that the sites are somehow “hot.” ‘Better not be left behind,’ you think.

OK, It’s Complex. So What Do We Do? read more

If ever a technology had a public relations problem, RFID is it. Saddled with the moniker “spychips” and attracting conspiracy theorists in droves, it is dogged by an image problem.

And that’s a shame, because RFID is a marvelous technology.

As consumers, millions of us use RFID every day whether we realize it or not.

RFID saves lives when used in hospitals to keep track of infants, life-saving equipment and medical instruments. It can help us recover our pets if they are lost. Farmers use it to keep track of livestock.  And it makes our lives more convenient in many daily uses — everything from allowing us to use the fast lane on toll roads, to electronic security badges to enter and protect buildings.

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