source
The challenging task of running a business in an unfavorable economy is becoming more hectic to entrepreneurs. As much as price raising in difficult times may not favor many businesses in terms of patronage, the idea of cutting product is hazardous. Did you know that cutting product standards does not only affect a company's reputation but leads to reduced customers or consumers lifespans. Yes you heard me right, product standard reduction increases death rate. This article aims not only to discuss the effect of price raising or product standard cut to business but an underlying danger to consumers; high fatality rate especially in consumable goods to end users.
Why business increase price
We all know the main aim of business is to maximize profit. Without profit in an organization such business can be termed busyness. Here are mains reasons why businesses raise price
To tackle Inflation:
When inflation hits the economy; where the value of money decreases, raising prices can help businesses keep up with rising operational costs and protect their purchasing power.
Profit Margins Maintenance:
This happens to be the primary reason businesses choose to raise prices during unfriendly economic times.During periods where the cost of raw materials, human work force or overheads increases, to secure their profit margins, companies may pass these extra made expenses onto consumers to ensure they remain financially vibrant
Product Quality Integrity:
By preferring products/service price increment, businesses can avoid compromising. This can be critical in maintaining the trust from customers, loyalty and brand reputation when talking about companies that have built a reputation for excellence and quality.
Why businesses Cut product standard
Operational Cost Reduction:
Opting for less expensive materials or simplifying manufacturing processes (especially when money spent on resources is equivalent or greater than money made from production in the company) can result in cost savings for businesses. Although this can be viewed as a safe haven during such times, it can be a short-term solution to contain economic challenges.
Affordable service and products:
Reducing product quality can enable companies to offer more affordable and pocket friendly options in the market. This can attract and be a budget- friendly replacement for good and services for consumers who wish to spend less.
Market competition:
Quality reduction can help companies remain competitive in the business market. This makes companies offer more for less to keep consumers returning to patronize rather than losing them to their competitors.
Effect of price raising and cutting product standard
Price Raising
When it comes to price raising, the effect is both sided. From the side of the entrepreneur or business at large, it can bring about low customer patronage and turnover as forgone alternative can be made in your product or services. This can shake business foundation and affect lifespan of a company if quick solutions are not met to solve the current trend.
From the side of the customer or consumer depending on how crucial your product or service can be, price increments raises the standard of living and cuts into consumers spending plans and habits. Price raising can lead to consumers under-utilization when they have to buy less with much. It can also lead to consumers opting for inferior goods or services which also had its impending effect.
Cutting Product Standard
source
The most risk associated with dropping product or service quality is the risk of customer dissatisfaction. This dissatisfaction breaks grounds leading to tarnish brand reputation, eroded trust, integrity and many others which can have long-term consequences. Bouncing back from such a situation is not always easy and may in most cases lead to business bankruptcy.
The effect of quality reduction on the side of consumers can be even much more hazardous. Let me put up a scenario, this is a story someone discussed with me and I was greatly discouraged.
We really do rely on drinking water produced from companies due to the popular belief that it is well treated for consumers. Here the story was different. Water in sachet or bottle are meant to stay for a long while and still be good for consumption yet this friend told me how the water within three days changed color and there was a green like appearance throughout the whole water.
The reason can be simple, companies in the verge of surviving undergo incomplete production to secure some profit but transfer the worse consequences to consumers which even threatens life. Just think of the number of persons who have consumed that water and its impending effect on lives. I must say unfavorable economic situation passes the greatest danger to the end consumer.
I once told a friend, human lifespan is undergoing a drastic reduction due to the economic situation. Have you ever considered putting together all the junk food you consume daily, did they undergo the necessary procedure in terms of production time and resources. The effect of this unfinished and unhealthy products affects us gradually as it weakens cells day after day.
When little is summed up it leads to compounding effects. The question here will be which is more preferable; companies going bankrupt or consumers lifespan decreasing due to inferior consumable products. It may look easy to side depending on your stand. I will always advise us as consumers to accept an increase in price during unfavorable economic situations rather than push producers to inferioritate goods, especially consumables.
To wrap things up, I use this medium to call on entrepreneurs even in the face of difficult and challenging economic situations to avoid quality reduction strategies, especially in consumables. Learning how to create value added service coupled with customer relationships in most cases helps in efficient and unalarming price increment. This may not sound easy in a competitive and skeptical consumer market who may prefer to opt for pocket friendly products. I always belief if something is worth done, then its worth done well.