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There is a light at the end of price hikes

21 Apr 2019 at 08:15hrs | Views
The pain of being in Zimbabwe is to look at the prices every time you pass a gas station? You are not Zimbabwean if you are not paying more attention to the prices of everything you buy? This is not peculiar to Zimbabwe  consumers everywhere are more price aware. People who've been indifferent to price increases for years are suddenly amazed at what things now cost. How can marketers cope not just with inflation but with consumer sticker shock? Zimbabweans are not happy as life squeezes them out of their joy their dignity and their livelihood.

Our politicians are not understanding the Customers.
Our politicians in power sometimes get too comfortable in their comfort zones and assume that everybody is enjoying as they do. The comfortable zone makes those in power seem insensitive.

If consumers have an option they can ignore the price hikes. There are ways in which customers can respond to higher prices: but these ways only work if there are options.

The government must control public transport this allows people to abandon expensive  or  downgrade from private to public transport; take fewer trips by car, consolidate errands, switch to public transportation.

The state must Invest in Market Research. It must discard existing customer segmentation assumptions and segment consumers around product usage behavior and price sensitivity. Those in power must get out into the marketplace themselves and talk to consumers directly to understand their pain points and how they are changing attitudes and behaviors in response to price inflation. They must then quantify these shifts and develop product and pricing strategies that balance the need to maintain both profitability and market share.

The government has to encourage competition.
However, lagging competitors in passing on price increases can have the same effect as a temporary price promotion. More customers than usual will be looking out for price promotions, but don't give away the store to those who don't need the discount, and cut prices not across the board but only on items selected as your inflation-busters. For cash poor consumers, these promotions should hit the key price points on small pack sizes. For cash rich consumers, encourage multi-unit purchases ahead of the inevitable next price increase.
Zimbabweans who previously welcomed the convenience of buying product, options, and services rolled into one are now asking for a detailed price breakdown. Each day brings stress and this time Zimbabwe is highly stressed.  The government must make it easy for more price-sensitive customers to better cherry-pick the options and services that they truly need by giving them an unbundled menu of options. It is the duty of the government to make sure the nation is properly fed and the government must never allow prices to be so knee shaking.

It is the duty of the government to Monitor Trade Terms. It must always be Sceptical  of powerful distributors paying more slowly than they turn the inventory they buy from the people. In an inflationary environment, they're making money on the float by stretching their payables. Government must manage inventory on a last-in, first-out basis to insure that increases in realised selling prices does not trail the increases in input costs.

There must be Increase in Relevance. Zimbabwe needs to persuade masses to cut back their expenditures on other products, which are not essentials. In tough times, Zimbabweans more than ever need and deserve the occasional treat and assurances.  The state must be able to tell the nation to substitute the need of foreign products for the local products.

Strong brands can hold consumer loyalty while increasing retail price points. Weaker brands risk private label and generic substitution.

Clearly, not all marketers are equally affected by price inflation.

Commodities like fuel where the manufacturer adds little value before the product reaches the end consumer, are more vulnerable, while sales of the most exclusive global luxury brands hold up pretty well regardless of price. Especially challenged are marketers of goods and services for which consumers don't necessarily understand the input costs:
The key here is to educate the nation apologise for the uncontrollable price increases, give price-sensitive consumers some promotional options, and reemphasize product benefits. Yes we all know that
Consumers hate price increases, but what is a company to do when material costs skyrocket?

When product companies see the cost of materials rise, the result for the nation is often a price increase or, less often, a smaller amount of product at the same price. For many products, it's better to reduce quantity than raise prices.

When prices for raw materials increase, companies need to compensate to keep their profit margin on target. This is normal and it calls for the government to have some sort of control on products.
Companies often face rising costs. Most choose to pass that along to consumers in one form or another, the most common being an increase in the retail price.

You looked at downsizing versus price increases from two perspectives: how manufacturers and the public think consumers behave, and how consumers actually behave. It is correct to say some manufacturers anticipate that consumers will be more sensitive to differences in price than differences in quantity. So this can help but not solve the problem.

As a country we have to define "success." If we define success from the perspective of the manufacturer, then there have been success stories.

The practice of reducing quantity while keeping price the same could be perceived as dishonest by consumers. Yes people  may perceive the practice of downsizing to be dishonest. This perception is made worse by manufacturers who try to hide the downsizing by retaining the same size container or outside packaging, but not filling the container as much.

There are certainly categories where a change in package size is more noticeable. These would include any category where a certain quantity of something is required.

The strategy of downsizing products must have an inherent endpoint - a bag of potato chips can only get so small! What else can manufacturers do to defray product costs without increasing prices?

True, you can only shrink a specific package so much. At some point, however, you can eliminate a product from your product line and introduce a "new, larger size" container and start the whole process over again.

Other ways to defray costs, as mentioned above, is to reengineer the product process to reduce costs, to replace more expensive ingredients with less expensive ingredients, and finally, to simply raise price.

The government needs new  fresh ideas. Talking politics will not help now. We must talk options and ways.
The nation bleeds and yearning for an economical turn around. It is very possible and it must be done

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Source - Dr Masimba Mavaza
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