Slashing Prices Cuts Values, Too

A new report confirms short-term price cuts do little to breed customer trust or loyalty. In fact, the Yankelovich poll says, they can actually be damaging to your brand. Seventy percent of respondents said that price cuts probably mean the brand is overpriced to begin with or the company is just trying to move old product. “People are suspicious if you significantly discount your brand,” explained J. Walker Smith, president of Yankelovich Monitor. “If you make significant changes in your value proposition it can confuse them. You have to give them reasons to buy stuff as opposed to just lowering prices as a knee jerk reaction to the economy.”

But how can companies appeal to penny-pinching consumers who, at the same time, are seeking greater value? Forbes reports on several alternative ways companies are helping recession-weary Americans get back on their feet:

  • FedEx, hoping to help those affected by layoffs, offered to print 25 free resumes for customers looking for a new job

  • Hyundai offered to buy back cars purchased before a layoff

  • The New Jersey Nets offered free tickets to unemployed fans who posted their resume to the team’s online job site

  • JetBlue is refunding tickets for customers who lose their jobs after booking flights

  • CitiMortgage (subsidiary of CitiGroup) offers three months of reduced mortgage payments for newly laid-off borrowers

  • Various restaurants are running “Pink Slip” promotions, including Laiola Restaurant in San Francisco who offered a free meal to anyone who was recently laid off

Rather than slashing prices across the board, these companies are zeroing in on opportunities to show they care and to make life a little easier for consumers. For their effort, they will reap the reward of having a loyal customer base once the market turns around. Consumers who take advantage of companies’ generosity in their time of need are likely to return when they do have money to spend.

 

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