Advice to The Client on Whether to Drop Prices During Economic Downturn

 Advice to The Client on Whether to Drop Prices During Economic Downturn

Question 1

My advice to the client concerning the issue of dropping the prices due to an economic downturn is that lowering the price may make the potential consumers in the market interpret that the quality of the product is less than competitors. Consumers need to be aware that the perception of lowering product price reduces its value in the market and diminishes the brand's reputation. Thus, managing price perception among the consumers has become a concerning issue because the firm needs to be keen on it to attract and maintain clients (Heda, Mewborn & Caine, 2017). Given the value of pricing to the consumer, it is the importer to make the company know if the product is worth the amount of money the consumer needs to pay. From this view, the manufacturing company needs to be strategic in order to avoid losing its clients due to pricing.

Question 2

The use of some form of discount pricing in conjunction with a "mail-in rebate" is an essential strategy for the manufacturer because it will help entice consumers to make the purchase at the store. This means that the client will need to take action because the rebate may not be redeemed in the future. Based on the season, I think that the manufacturer could take steps and reduce mountain bikes to attract more consumers. The manufacturer could maintain it for a bit sometimes so that at the beginning of summer, they would offer the product's price at the original price (Heda, Mewborn & Caine, 2017). Although the idea by the manufacturer to reduce the price could help increase its sales in the market, they should know that the returns on investment will be low. Thus, to avoid such circumstances, the manufacturer should be strategical in order to maintain its revenue collection in the market. Large purchases like a mountain bike would need the consumer to take time to save so that they can buy; thus, enhancing discounts on the product would make it easier even for people with a small budget to afford without reducing the price.

Given that the client is a manufacturer of mountain bikes, I would advise manufacturing additional bikes at lower cost and looking for different market segments to sell as that would help maintain the loyalty of its current market. This decision would help the company expand its market and enhance brand loyalty among the consumers (Heda, Mewborn & Caine, 2017). Because the consumers in the new market segment will take the product products as the option given the economic downturn. The free delivery of bikes should be incorporated into the company advertisement plan. That will make the client increase the number of sales because people always feel good when the product is delivered to them on time and for free. The consumers would see the decision of free delivery as advantageous to their decision to purchase the bike at the advertised cost.

Also, given that the client's main aim is to increase its revenues collection, it is essential to expand its market base by advertising the new areas it will consider establishing its business. Mountain bikes are essential to individual life because they help protect you from heart attacks and some cancer diseases. Thus, expanding the market will give the client more consumers who would like to ride the bike for their healthy wellbeing. What will determine the marketing strategy of the client in the new market is the ability the manufacturer will use to enter the market. 

References

Heda, S., Mewborn, S., & Caine, S. (2017, January 03). How customers perceive a price is as important as the price itself. Retrieved April 11, 2022, from https://hbr.org/2017/01/how-customers-perceive-a-price-is-as-important-as-the-price-itself