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Price Discounting in a Recession - Knee jerk reaction or considered strategy?

A recent report on BBC business news highlighted the plight of British businesses in what some argue is a double dip recession. With people vying (or should that be buying) for business in nearly all industries, never before has the consumer been faced with such a glut of discounts and price drops.

Of course it may appear the obvious gambit, but is it really the best move for a business who wants to remain truly competitive?  Dropping price suggests:

  •   - It wasn’t really worth it in the first place
  •   - You’ll drop price on all things and in the future
  •   - That the only reason for buying from you is the price.


Of course the third one may be of some help now, but we ‘reap what we sow’ and it may prove a little more difficult to get out of the price war than it was to get into it. Getting into it is easy; getting out is a different matter. It is indeed a road fraught with danger.

If it is true that the best time to start a business is when we are in a recession, then arguably the best time for business to stand firm on prices is also when we are in a recession. Because when the good times come around as they surely will, the business that stands firm today is in a great place to grab their ‘unfair’ share of the market in better times.

So what can you do about it? Well, there are options

  1. Offer sound benefits – the more you reinforce sounds benefits why people to buy from you, the more they have to justify why Price is the issue. Have you ever bought something you knew you could get cheaper? The less benefits they have, the more price becomes an issue.
  2. Add value – Dropping price isn’t always the answer. Give reasons why people should buy using the word ‘because’ which has proven to have a positive effect in getting ’buy in’. Add things that are perceived as real added value. Keep the price the same but give something else. A better guarantee? An additional giveaway? The options are many.
  3. Build customer loyalty – the cheapest business to get is the business you already have. Could you offer a reward/loyalty programme? An incentive to recommend someone?

Price is generally good for getting people in the door, but not so good for getting people to come back.

  • The easiest thing to do in difficult times of course is to give discounts and drop prices.
  • The hardest thing to do however is to justify the value. Yet millions of sales are made all over the world at the highest price (many since you have been reading this)

We may well be struggling to surface from of a recession as the BBC report pointed out.  But is your move to win business a ‘knee jerk reaction’ or a considered strategy?

Only one person can be the cheapest. Do you want that to be you? The easiest thing for your competition to duplicate about you is your price. What will happen to those customers who came to because you appeared to be the cheapest? They’re gone.


Sales figures for the UK High Street showed a minor increase (less than 1%) year-on-year in November and amazingly most pundits questioned the figures in disbelief.

Price cuts have had their day and may well only make things worse.

An alternative strategy


It will not surprise you to know I also frequent the occasional shop. I can’t help it if I am a ‘modern man…’ Generally I find I make more of an effort to start a conversation than the shop assistants or counter staff.  As pleasant as most people are in retail outlet – few could be called ‘sales people’ – at best the majority are ‘order takers.’

I was recently hired by a manufacturer to help with the launch of a new concept through a well-known retail chain. My client had secured a trial in 22 stores across the UK. It was an “add-on sale” directly linked to the retail chains main products which nearly always purchased as gifts for other people. All the counter staff had to do was ask a simple question whenever someone came to the till point to buy the main product.  Here is the question I taught them. – “Would you like to make that gift even more special..?”

In those shops where the staff saw themselves as ‘sales people’ and had the confidence to ask the question, extra sales were made and the ‘average order value’ went up. Result.  Unfortunately that was only in about six of the 22 stores…

So what can be done about it?


One answer to the low demand situation is to create demand – to actually stop taking orders and to start selling.

Many organisations have de-skilled the customer assistant role and under invested in their development so it is little surprise we have a majority of order takers in those positions.

Whether your customers call you to place an order or pop into your shop or visit your website – we have to find out more about the customer’s motives behind the initial transaction and use that information to offer an appropriate secondary item for purchase or an upgrade to a high value item.

To make that happen consistently across a business may require the role of the customer facing staff, or system, to be redefined; such that people buy-in to the idea that they are a ‘sales person’ who have the belief, the confidence and the skills to ask productive questions in an effective way and so increase the ‘average order value.’


Such challenges have been our business for many years and are addressed head on in our new book ‘The Value House’ (Ecademy Press).

If you’d like more information about how we could help you or to order a copy of the book, go to