Protecting Your Prices

True story: A few years ago, when his market was hit hard by recession and discount competition, a Southern upscale jeweler decided to fight fire with fire—he became a discount jeweler himself. Within a year, the economic situation improved … but not for the jeweler. He couldn't recoup his credibility with the customers he lost when he cut prices, and he found he had to carry lower-quality goods to compete, though he never really undercut the price cutters. In the end, his use of discounting to compete put him out of business. That is an example of what not to do with one's pricing strategy in tough economic times, say business experts and successful jewelers. "If you reduce your merchandise price points in response to tough economic times, you create a self-fulfilling prophecy and ensure a decrease in sales volume," says Lori Askew, a managing partner in Vantage Group, a leading
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