Packing your bag to quit, reason, Low sales? You should never do that.
There are hundreds of techniques suggested by many eCommerce experts to increase the conversion rate. Most of these experts provide a solution and that is, ‘Low Sales! Slash Prices’, considerably classic and one of the most obliging ways of penetrating into the market, and to increase the customers’ base.
The marketing gurus have agreed on one point and that is, if the demand of the product is low it can be sold in lesser price or in the package deals. But the latest researches are contradicting with this myth and states that the customers are moving from “bargain hunters” to “value seeker”. However nothing in this world is absolute and one will always find both types of customers i.e., “bargain hunter” and “value seekers”. The ratio may vary depending on the purchasing power of your target market.
Recent researches state that culture is one of the most significant driving factors that make a customer either “bargain hunter” or “value seeker”. This makes culture as important factor to study in target market. The problem multiplies for e-merchants during analyses of their customers’ behavior as they are targeting a wider market where customers belong to different countries and thus different cultures. Now it can be said that for an e-business it is vital to focus on quality as well as the price because it has to face both price conscious and value conscious customers.
The quality products do sell even on higher prices but for a new business, in order to attract and build customers’ base, one has to start with low pricing strategy. How much low? This is the question that arises in every e-merchants’ mind. The basic states that it should be cost + nominal profit! Let’s see what is wrong with this basic low pricing technique.
Imagine that your competitor charges double the price of what you are offering for your product. It will surely leave a message in the minds of your competitor’s customers that why are you charging so less? They might think that it is of low quality material and that is why the cost is lower. To avoid customers from making such sort of perceptions it is suggested that never reduce the prices drastically.
Remember that your online store is not a testing ground where you can continuously change the prices in order to test your new pricing formula. Instead of reducing prices of all products, which is a big step, it is better to test it through bargaining tool i.e. Magento custom price extension. It allows your customer to enter their own price which they are willing to pay for your product. This extension is one of the easiest solutions for Magento based store owners who want to test whether their e-store conversion rate improves with the reduction in prices or not?
Applying a flat discount on all products for limited time can also be used to test whether high prices are the reasons for low sales or not. FME has developed a dynamic discount extension which can be used for this purpose. It also allows store administrator to give discount on special events.
Your turn! Speak your mind!