Inflation is still on the rise, putting businesses at risk
Prices worldwide are increasing every month. The last time inflation reached such a high level was twenty years ago. In June, it hit 13.2%, the highest since June 2000. In Poland, this summer it exceeded 15% and is expected to rise further between now and 2023.
Re-evaluate your product mix
Consumers react to any increase in prices. Whether it is an increase in butter, fuel or clothing, they are not happy about it. That’s why you need to think about how to satisfy your customers and keep them loyal to your brand.
Dust off the magic rule of 80/20
Think about which products bring you the most income. For nearly all businesses, 20% of their products generate up to 80% of their revenue. Consequently, focus on promoting and producing the most popular and best-selling products or services. Offer them at affordable prices to all customers. Don’t waste time, money or energy on products that are not in high demand. Inflation affects financially creditworthy people less than it does the regular market. Upgrade the products you see potential in and sell them more expensively. Customers who can afford it expect higher prices and are prepared for them.
Your product will not get lost abroad. Selling in each individual market has its own characteristics, but in some ways, they are all the same. Profits and preferences know no boundaries. Expand and spread your risk across multiple countries.
Businesses that choose to export to other countries are generally much more productive and profitable than those that focus solely on the domestic market.
An example of a successful expansion
Consider, for example, our partner Foxigy. During the crisis in late 2020, they decided to expand into Romania and Hungary. A few months later, we were already helping them expand into two further countries. Currently, its turnover has exceeded one million euro.
Take heed, as in times of economic crisis, you need to think more carefully about where to export to. This decision should help minimise risk rather than jeopardise the company in the domestic market. With exclusive access to Google’s export tools, we can choose the right country based on real data, even during this challenging time.
Hone in on your high-value customers
Google Ads has long allowed you to place bids on those who, according to the algorithm, place the largest orders. This means you don’t have to focus on cost-per-click (CPC) or cost-per-action (CPA) alone. Try out the strategy of maximising the value of conversions.
How to justify higher prices
With some products or services, the price simply cannot be sustained. If you need to increase product prices, do it wisely. Raise the sum and add value. Ditch the branding campaigns. Put your money into more creative brand-building promotions that will also benefit the consumer. Add a few extra grams or millilitres to the packaging. If you’re selling clothes, add an extra pair of socks to the bundle. Create value packs that customers will pay more for but deliver more value.
How to reduce costs in restaurants
There has been a year-on-year increase in food prices of as much as 21%. This is mainly due to higher energy and fuel prices, but also to the weather. If you want to keep your prices the same as they were before inflation, you need to cut costs.
You will need to really look at your menu and think about which items you can save on. Your goal should be to maintain the customer experience.
That’s why you should start by making small changes:
- Save on more luxurious goods, unless you are an establishment frequented mainly by more upmarket customers.
- Replace more expensive products with cheaper versions.
- Partner up with local producers.
- If you can no longer afford certain ingredients, simply tweak the menu.
Get inspired by catchy video ads that can help your business stand out from the other venues in your area. You don’t need a big budget to create videos that grab attention. You can even make your own videos on Instagram and TikTok.
Seek out solutions, not excuses
In times of crisis, it is the businesses that show consumers that they are operating with the best of intentions that thrive. They are sympathetic to consumers’ plight and do not try to force products on them that they cannot afford.
Inflation in the travel industry
Let’s take tourism as an example. At a time of inflation, when ticket prices are soaring, and airports are struggling with staff shortages, travel agencies need to think differently.
Don’t just push customers towards destinations abroad. Adapt and focus your activities on travellers within your country. Help the domestic travel industry, support local B&B owners and show people that it is equally possible to travel appealingly and seamlessly within the domestic market.
A healthy business even in times of inflation
Ensure you don’t cut back on your advertising budget despite rising costs. Maintaining your marketing spending during a crisis will pay off in the end. If your profits are falling despite your ads running and orders coming in, the problem may lie elsewhere. Get in touch and together we’ll take a look at the pricing strategy and financial health of your business.