When market players increase their prices, what’s an entrepreneur to do? I have discussed the three possible scenarios that may arise when pricing hikes occur but knowing which approach to settle for is a whole different issue that I’ll deal with in this article.
The most important aspect about price hikes is that an entrepreneur has to act first and decisively. No waiting to see what the competitors are going to do then reacting. That’s playing their game and since it’s impossible to know what their motivations are, it would be risky to copy their move without proper intelligence.
The best way to figure out how to react to a price hike is to hit the history books and gather information on previous instances of price hikes, how the players reacted, how it turned out, who won, who lost and what lessons were drawn.
My favorite marketing history sources are past issues of newspapers and trade publications as they contain knowledge on what happened then.
Once, the plot has been established, it’s time to pick a pricing approach. Like I said, it’s a marketing decision so it needs to be done with the competition in mind. That means that in way, some guesswork has to be done but not really since history will give a clear image of what’s to happen in the near future.
Once a pricing hike approach has been selected it’s time to implement it in a fast and furious manner meaning that if prices are going to be raised, they need be raised and a communications campaign must be launched to explain to the prospects the reasons why and why they still must buy at the new prices.
All this seemed so theoretically complex that I even almost confused myself in explanation so watch out for an illustrative example in a forthcoming article.
