December 26, 2008
Bringing in the customers
With the Christmas retail season expected to be challenging this year, businesses are looking for ways to attract more buyers and sell more products. What are some of the common ways to do this?
Dr. Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:
"Well, the most obvious way is to cut prices, and that's based on the simple economic principle that lower prices cause there to be more buyers, and those buyers are going to buy more stuff. And revenues can actually rise to the retailer to offset those lower prices if the volume goes up enough; that is, if they sell enough product. Now there's a more sophisticated way of doing this, and that is not to cut prices for all consumers but to target the price cuts to customers who might need that additional push. And businesses do that with coupons or circulars. That is, you only get the price reduction if you have the coupon or circular, and this means that business can, therefore, have the regular customers pay the regular price, but those new customers - those customers they're trying to attract, who bring the coupons or circular - they get the lower price. But the whole principle here revolves around the issue of price. The simple thing is: lower the price, you're going to get more customers."
Posted by Dave at December 26, 2008 08:00 AM