Businesses operating in the country have been strongly warned against cutting prices in the wake of the economic downturn in the country.
Managing Director of Millward Brown Sub-Saharan Africa, Soumya Saklani, who issued the warning in Accra on Thursday, said business owners should focus on other ways of sustaining their businesses in the current economic crunch and stop reducing prices in order to survive.
The Managing Director of the Marketing Research firm disclosed this in a presentation during an evening lecture organized by the Chartered Institute of Marketing Ghana (CIMG) under the topic: ‘Resilient Marketing Metrics and Strategies for Effective Brand Growth in a Meltdown Economy.’
Recently, there has been an intense price-war among many firms on the domestic market, particularly among Oil Marketing Companies (OMCs) in the petroleum sub-sector, who have cut prices to win customers.
Although some of these firms are operating currently, Mr Saklani said the reduction of prices is not a sustainable and innovative market practice.
According to Mr. Saklani, companies that cut price in the short-term to help them sail through the current challenging business environment successfully could register a reduction in their sales in the long-run after the recession.
This, he said, was because all things being equal, when customers’ standards of living start to improve concurrently, their spending habits would change toward premium brands on the market instead cheap ones.
He said, “Price cutting is the easiest thing to do when sales are not doing well, but too much of that can be a bad thing.”
He added that “recession don’t last forever. Times change and when times turn around consumers go back to spending more, but they get used to your own brand at a lower price so why will they want to spend more on your brand now. They will now aspire for other premium brands instead of yours that is known for its cheapness.”
According to him, there are innovative ways of sustaining a business during economic meltdown such as promotion sales, installment payments, among others.
Build Strong Brands
The MD called on Ghanaian business owners to increase their investments to strengthen their brands in order to make them attractive to domestic and global buyers.
“When you look at the international or regional players, I think there is strong branding but if you look at the Ghanaian brands I think there is an opportunity to strengthen branding.
“Ghanaian business owners should actually focus on understanding the value of developing a strong brand and investing in it.”
Source: Daily Guide
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