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marketing for small business owners

Is Price Promotion A Good Marketing Strategy For Small Business Owners? 🎊


Conducting price promotions can be a powerful marketing plan for small business owners to increase their sales and profits. When used properly, they can help drive customers into stores, entice them to buy more products, and encourage them to return in the future. Price promotions also generate excitement around a business’s products or services, increasing brand awareness and loyalty among existing customers. 


>Download Now: Free PDF How To Drive Pricing Strategy To Accelerate Sales & EBIT Growth


The problem is though, small businesses typically have limited funds and personnel dedicated to marketing making it difficult for them to launch effective promotions. Furthermore, small businesses may not have the necessary expertise or experience to conduct promotional campaigns effectively. This can lead to costly mistakes and a lack of return on investment if the promotion is ineffective. 


In this article, we are going to discuss how small business owners can properly execute price promotions as a form of marketing strategy. We answer what are the dos and don’ts and give tips on how to avoid the risks. We argue that it is important to set realistic goals and objectives before initiating a promotional activity in order to measure its effectiveness.


At Value Culture, we believe that the right price promotion strategy can help increase demand and sales, while also increasing brand loyalty and customer satisfaction. By the end, you will know if price promotions are a good marketing strategy for small business owners and what is the right way to utilise them.


The Importance of Pricing Strategy in Small Business Marketing


Pricing strategy is crucial for small business marketing. It impacts how customers perceive a business and influences buying decisions. In competitive markets, pricing can be a key differentiator. For example, a small bakery might use pricing to position itself as a high-quality, premium option compared to larger chain bakeries.


One important aspect of pricing strategy is understanding customer value. Businesses must consider what their customers are willing to pay based on the value they receive. For instance, a local cleaning service might charge higher prices than competitors because they offer eco-friendly products and personalised attention.


Additionally, pricing affects profitability. By setting prices strategically, businesses can ensure they cover costs and generate profit. For instance, a small software company might offer tiered pricing plans to cater to different customer segments, maximising revenue potential.


Moreover, pricing communicates brand positioning. Businesses that price themselves too low might be perceived as offering low-quality products or services. Conversely, those that price too high may alienate price-sensitive customers. Finding the right balance is essential for success in marketing for small business owners.


Furthermore, pricing strategy should be flexible to adapt to market conditions. Small businesses must monitor competitors’ pricing and adjust their own accordingly. For example, a boutique clothing store might offer seasonal discounts to remain competitive with online retailers.


In essence, pricing strategy is integral to small business marketing success. It shapes customer perception, impacts profitability, communicates brand positioning, and requires flexibility to adapt to market dynamics. By understanding the importance of pricing strategy, small business owners can make informed decisions to drive growth and profitability in their marketing endeavours.


Should Small Business Owners Use Price Promotion As A Form Of Marketing?


Price promotions can be a great way for small businesses to create a buzz and drive sales. However, it is important to consider the impact that price promotions can have on customer relationships in the long run. Research suggests that customers may respond positively to an initial promotion but may expect future discounts, leading to decreased profitability over time.


Price promotions can be unprofitable for small businesses due to the decreased margins they cause. In some cases, a business may even earn less than its cost of goods sold when utilising price promotions. This type of promotion has the potential to drive away loyal customers and deter new ones from purchasing at full price in the future. Additionally, when small businesses offer discounts to stay competitive, they can be outpriced by larger businesses with greater buying power who can offer even lower prices.


In fact, recent studies show that 84% of price promotion marketing plans of small business owners are deemed unprofitable.


What’s going wrong? Some small businesses have been over-promoting and discounting to drive volume increases; and inadvertently driving customers away. When you overuse the promotional lever, customers become more price-sensitive. Over time, you weaken your brand pricing power and deplete your margins.


In some cases, price promotions can put a strain on a business’s cash flow if the volume of customer purchases doesn’t outweigh the loss in margin. Ultimately, small businesses should consider carefully before implementing price promotions as they have the potential to be unprofitable, deter customers, and strain cash flow.


Discussion On Developing Pricing, Promotion And Marketing Strategies For Small Business Owners


By properly assessing their operations and customer base, small businesses can evaluate the risks associated with utilising price promotions and decide if this promotional tool is right for them. Don’t run blanket promotions for the sake of it. Don’t get panicked into action and make a mistake. Here are a few tips: 


marketing for small business owners


1. Focus on your target market. 


Ask yourself how, what, when and why your market consumes and buys your products. By understanding their target audience’s needs and preferences, small businesses can create effective marketing and pricing plans that will help them reach their desired target market more efficiently. Focusing on the target market also enables small businesses to save money by minimising their marketing costs and ensuring that they are not spending on unnecessary efforts or targeting the wrong audience.


2. Build your brand, don’t cannibalise your offers.


Small businesses need to build their brand to gain widespread recognition, establish trust among customers, and cultivate loyalty. One of the most effective ways for small businesses to build their brand and establish a presence in the marketplace is by offering compelling offers. By creating value-driven offers that appeal to your target audience, you can make your business stand out from the competition and create a memorable user experience. Additionally, offers can also be used to capture valuable customer data that you can use for future marketing initiatives.


3. Work out the value of your products.


It is important for small business owners to understand the value of their products, as this helps them make better-informed decisions when setting price points and making sales. Look into the unique features of a product or service, such as its quality, and functionality. Understanding the value of a product can help small business owners assess the potential for growth in the market, better tailor their products to meet customer needs and desires, and develop effective marketing strategies to get their products noticed.


4. Rein in on those price inconsistencies. 


Price inconsistencies can be difficult for small businesses to manage, as they often have limited resources. To avoid price inconsistencies, it is important to regularly review pricing policies and procedures, including employee training practices. This will help ensure that products are priced fairly and consistently, allowing small businesses to remain competitive. Moreover, it is important for companies to track customer feedback and complaints about pricing, as this may help them identify potential inconsistencies before they become a problem.


5. Remember that marketing for small business owners entails optimising net profit rather than ROI. 


Optimising net profit should be the primary goal for small businesses because it provides an accurate measure of their financial success. Net profit is an important metric for small businesses as it indicates how much actual cash the business has available to reinvest in operations. Small businesses should place more emphasis on optimising net profit rather than return on investment (ROI). Focusing solely on ROI can lead to a business making decisions that may not be beneficial for its long-term growth.


Value-Based Pricing: A Competitive Advantage for Small Businesses


Value-based pricing offers a competitive advantage for small businesses in marketing. This strategy focuses on the value perceived by customers rather than solely on costs. By aligning prices with the benefits customers receive, small businesses can differentiate themselves and command higher prices.


Firstly, value-based pricing allows businesses to capture the maximum value from their products or services. Instead of pricing based on production costs alone, small businesses can consider the value their offerings provide to customers. For example, a small consulting firm might charge higher fees for services that lead to significant cost savings or revenue growth for clients.


Moreover, value-based pricing enhances customer satisfaction. When prices reflect the perceived value of products or services, customers are more likely to feel they’re getting a fair deal. This can lead to stronger customer loyalty and positive word-of-mouth marketing for small business owners.


Additionally, value-based pricing can boost profitability. By charging prices commensurate with the value delivered, small businesses can improve margins even in competitive markets. For instance, a small software company might offer a premium version of its product with advanced features, priced higher to attract customers willing to pay for enhanced functionality.


Furthermore, value-based pricing supports effective marketing strategies. Small businesses can use value-based pricing to highlight the unique benefits of their offerings in marketing campaigns. By emphasising the value proposition, businesses can attract customers who prioritise quality and are willing to pay a premium.


Therefore, value-based pricing is a powerful tool for small businesses in marketing. It allows businesses to capture maximum value, enhance customer satisfaction, boost profitability, and support effective marketing strategies. By adopting value-based pricing, small business owners can gain a competitive edge in their respective markets.


Implications Of  Learning Price Promotion Marketing For Small Business Owners


Price promotions are good when you know what you are doing. Often businesses launch promotions to show they are doing something to counteract challenges. When in fact, doing nothing would have been more profitable. Focus on who you are selling to and why they are buying from you. Different customers are willing to pay different prices for products and services, so small businesses should tailor their promotions accordingly.


To make sure that businesses are getting the most out of their price promotions, have a clear and well-defined strategy. Defining a plan makes it easier to manage expectations, track results, and adjust as needed. A successful strategy should include objectives such as maximising sales, increasing customer loyalty and awareness, targeting specific customer segments, and increasing profit margins.


Small- and medium-sized firm employees frequently have their hands full of workloads. But, our findings show that with the right set-up and pricing plans in place, incremental earnings gains can begin to occur in less than 12 weeks. After 6 months, your teams can capture at least 1.0-3.25% more margin using better price management processes. After 9-12 months, businesses often generate between 7-11% additional margin each year as they identify more complex and previously unrealised opportunities, efficiencies, and risks.


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Bottom Line


Ultimately, understanding the potential risks and rewards associated with price promotions is key to making an informed decision. By carefully assessing their operations and customer base, small businesses can make an educated decision on whether or not to utilise this promotional tool. With a clear view of all the variables involved in such decisions, small businesses will be better equipped to make decisions that best suit their unique needs. When done properly, price promotions can be a great marketing strategy for small business owners to increase sales and attract new customers.


For a comprehensive view of ensuring the continuous growth of your business, Download a complimentary brochure on How To Drive Pricing Strategy To Accelerate Sales & EBIT Growth.


Are you a small or medium-sized business in need of help aligning your pricing strategy, people and operations to deliver an immediate impact on profit?

If so, please call (+61) 2 8607 7001.

You can also email us at if you have any further questions.








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