Back in the day when the only way to buy an Oliver Mtukudzi album was to physically visit the music store and not download it on itunes, there used to be a marketing principle that used to guide those in trade known as the 4 Ps: Product, Pricing, Placement and Promotion. And just like Oliver Mtukudzi, this principle has stood the test of time, helping business attain success. This principle has come to be known as the marketing mix and is defined as a set of marketing tools that the firm uses to pursue its marketing objectives. In services marketing, the marketing mix is extended to the 7 Ps, extended by process, people, and physical evidence.
Today l want to touch on one simple principle, price, which seems to have a lot of influence on the decision making of both the business and consumers. By definition price refers to the value which a consumer places on a particular product and often has a monetary value. Price is an important marketing tool as according to simple economic principle, price is the major determinant of the demand and supply of a product. At equilibrium, these forces of demand and supply depict the actual value of a product. Therefore in order to achieve set out targets, a business should be able to correctly price their products so as to maximize revenue.
Another reason which makes getting the pricing of a product right a very important objective is the fact that consumers are usually more sensitive to pricing than the other marketing principles. The price of a product communicates a lot about the product including its quality and availability. So it is very crucial for businesses in today’s competitive market to ensure that they get their pricing correct as it will have a huge impact on revenue and product positioning. In Zimbabwe, the current economic circus that is on show has left many business owners faced with a dilemma of how to price their products and in what currency. So complicated has the situation been that other shop owners have had to close shop whilst others have resorted to scrapping prices off their products and placing a value as and when demand arises.
Price affects the sales volume and profit margin which ultimately will determine whether the business will continue or shut down. In Zimbabwe, many business owners have decided to cash in on the current chaos and milk as much as they can from desperate consumers who are buying goods out of panic as they fear a product shortage is looming in the country (having experienced this in 2008, I really don’t blame them). With the demand for products high, and their supply limited to only those who can access foreign currency to import, the forces of demand and supply are thrown out of the window, and products are being sold to the highest bidder. I guess this unorthodox way of doing business is exactly what Dr Gideon Gono was referring to in his book ‘The Casino Economy’ published in 2008.
However business owners should know that profit maximization is not the only way to the top. Extortion of consumers and taking advantage of a situation is not the fastest way to the top. Those that have been in business long enough will attest to this. A business is built overtime and not overnight. Product quality, brand name, reputation and good customer services are the virtues of patience in business. Don’t get me wrong, l am not saying businesses should not make profits. But any business should be run with a level of consciousness referred to as business ethics.
Surely one cannot purchase a bottle of 2l cooking oil for $3.00 and so desire to resell it for $16.00. Remember this is not a once off sale that you want to conduct. Every business person should have a long term vision and see into the future. The current economic conditions will not be there forever. It’s just a phase hence why l continuously refer to it as a circus just passing through town. Very soon it will be gone and things will return to normalcy. Surely in my rightful senses as a consumer, l will not return to a shop that extorted me; a shop that stole from me when l was at my weakest. Business should focus on building good customer relations, building customer loyalty and building their product brand. This is the time.
This greedy mentality will not get us anywhere as Zimbabweans and especially as the business community. Every business opens its doors for the first time with the desire to operate as a going concern. Likewise every customer that walks into your doors as a business owner has the desire to return tomorrow, even when faced with the option of walking into other doors. Do not drive away customers by extorting them of their hard earned income. Build a reputation, maximize on sales volumes and repeated sales. Good customer service and continuous product develop will help you to ultimately get to the top. Overcharging can get you there but will it keep you there? Food for thought…
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