7 Tips for Managing Price Hikes

Following the historic 9 percent run up in oil futures June 6, expect your customers to be more concerned than ever about prices. But it's not just customers you have to worry about -- you need to be thinking right now about how to manage your business through the deepening economic gloom, especially if you are a commodity provider.

Harvard Business School marketing expert John Quelch serves up seven tips for marketers to consider on his Harvard Business blog. Here they are in brief; visit his post for more in-depth info.

1. Understand the buying habits of your customers.
2. Segment consumers around product usage behavior and price sensitivity.
3. Marketers must reverse engineer products and packaging to hit key retail price points.
4. Cut prices not across the board but only on items selected as your inflation-busters.
5. Unbundle offerings to make it easy for price-sensitive customers to cherry-pick options and services.
6. Manage your inventory on a last-in, first-out basis.
7. Persuade customers to cut back their expenditures on other products, not on yours.

Decorative candles, for example, are highly sensitive to oil prices and the purchases are discretionary. The key here is to educate the consumer, apologize for the uncontrollable price increases, give price-sensitive consumers some promotional options, and reemphasize product benefits.

(Gas price image by richardmasoner, CC 2.0)