Industry Actions: Seven Moves For Tough Times
Sixth: Maintaining Pricing Discipline
We have found that companies that drop their prices too aggressively and across too many products and services are usually making a big mistake.
Cutting prices too aggressively makes it much tougher to raise prices when market conditions improve because the price cuts will have de-valued the company’s brand and consumers will be more reluctant to pay their higher prices. Before pulling the pricing-cutting lever, consumer electronics companies need to consider which products in their portfolio are differentiated and where to take action. This is also the time to fine-tune the product mix by, for example, focusing on the entry-level products that meet the needs of belt-tightening consumers.
Contrary to expectations, all pricing power is not lost. For example, a new Accenture digital lifestyle survey of 3,000 Americans found that, because of the global economic recession, 56 percent of respondents indicated they were less willing to spend more for environmentally friendly consumer electronics. Companies might reconsider whether to cut prices of their best ‘green’ consumer electronics to address these consumers. Or they might focus their efforts on the 44 percent of consumers still willing to pay a ‘green’ premium.