Small Business Quick Quiz
Question #7
If sales are down, the best solution is to…
- a. cut prices and have a sale
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The answers to the questions are listed here in short form. For more complete discussion of the issues raised, visit the linked resources. Better still, subscribe to Small Business Pro. newsletter.
7a. The only thing dumber than allowing price to be the issue in selling is making it the issue! It’s a public declaration of your ignorance and incompetence in the most critically-important area of your small business. This is a great way to tell your market place two things (because that’s what they’re going to assume anyway)...
- #1. your prices were too high in the first place, or
#2. you’re in trouble, so they’d better get in before the rest of the vultures pick you clean!
See the Resource Information on Price Cutting — Fast Track to Failure
7b. This is at least a move in the right direction! By increasing prices by a tiny percent, you can increase your profit by substantial amounts. And by cutting costs (NOT prices) you can do the same. Most small business people don't understand the vital relationship between pricing and profitability. They think in terms of total price rather than margins. See the Resource Information on Pricing Strategy for more helpful ideas and tips.
7c. Poor or falling sales are NOT a problem for any small business. They’re just a symptom of the real problem. You need to find out why people aren’t buying from you. If your product is unreliable or doesn’t work, if your service is poor, if you don’t provide genuine value, if your retail location is wrong or a thousand other reasons, advertising more will NOT solve your problem. In fact, the more effective your advertising is, the faster it will sink you — because it will focus more peoples’ attention on the fault! Start asking questions. Dig deep. Identify the real problem and fix it, fast. THEN advertise more. See the Resource Information on Marketing, Selling and Advertising and How to do Ads that SELL!
7d. Bingo! You’re right on the money. Read the answer to 7c and you’ll see why. You need FACTS. See the Resource Information on Marketing, Selling and Advertising and How to do Ads that SELL!
7e. If necessary, based on what your market research tells you (see the answers to 7c and 7 d above). But don’t just revise your marketing strategy without getting to the bottom of the problem first. The first step in any marketing strategy is market research... finding out the FACTS. See the Resource Information on Marketing, Selling and Advertising and How to do Ads that SELL!