Simon-Kucher forwards pricing advice for companies during coronavirus

01 April 2020 Consultancy.asia

With the world’s goods and services market currently turned upside amidst the coronavirus pandemic, global consultancy Simon-Kucher & Partners has forwarded some valuable advice for companies on the question of sales, pricing and marketing.

The long-term economic impact is still uncertain. But for the time-being, the spread of the coronavirus pandemic has knocked the world of commerce completely off its axis – obliterating demand for certain products and pushing it sky-high for others. Human resources, supply-chains and the purchase and delivery of products have also been drastically altered. This poses a tricky question as to pricing, both in the present, and with a view to when things returns to normal.

Simon-Kucher & Partners – one of the world’s foremost marketing and pricing consultancies – has assembled its experts to offer some advice for business leaders across a number of industries, both as to those suffering the worst of the outbreak and others which are likely experiencing a substantial uptick, including the leisure, travel, & transportation sectors, consumer goods & retail, and software, internet & media. The very first point: work together with your customers.

Another strongly emphasised point, Simon-Kucher’s consultants are firm in stating that companies should steer well clear of exploiting an already difficult situation. “A short-term bump in prices is not only wrong from a moral perspective, deliberately taking advantage of customers could jeopardise long-term revenues and profits,” the firm warns, adding that it’s acceptable to roll-back some promotions, but companies need to avoid perceptions of gouging.

Simon-Kucher forwards pricing advice for companies during coronavirus

Instead of trying to profit from the crisis, the firm says, companies should instead focus on other means of protecting their revenues and customers during the outbreak – and then later remind consumers once the crisis subsides that their brand has stayed true to its promise. Meanwhile the key message for those which are currently under pressure is that businesses should avoid hasty price decreases, and also turn their focus to maintaining and developing customer relations.

“There will be temptation to gain liquidity through cheaper prices, but price is not the reason people have stopped booking,” says Dimitris Hiotis, Simon-Kucher’s global leisure & travel lead, who adds that industry players should avoid knee-jerk reactions to  competitive moves. “Any attempt to drop prices will most likely drive the market down, potentially leading to a price war with the competition, further damaging profitability through margin pressure and value deterioration.”

In terms of navigating the crisis through a focal pivot to customer relationships, gains can be achieved here by exploring value-added products and services linked to increased customer-centricity and improved customer experience. As one simple example given by Tim Brzoska and Ricardo Rubí, the global heads of Simon-Kucher’s Consumer Goods & Retail practice, retailers now have an opportunity to promote extra services such as grocery delivery or curb-side pick-up.

Whatever the case, Simon-Kucher concludes, it is first and foremost important to give customers flexibility and peace of mind. “In this period of uncertainty, convenience and customer-centricity are more important than ever. Finally, think long-term. Once the virus is controlled and the crisis is over, customers will reflect on how companies behaved. Start making plans on how to harness this loyalty for future business, as well as how to offset the losses once the crisis is over.”