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i want to extend my knowledge by exchanging ideas with people who are the best in this field

Hi there,

I am running a press distribution company, including distribution of newspapers, magazines and books to around 300 outlets. Also I manage a chail of retail press stores.

Looking at the latest increase in fuel prices and the negative reflections of the market, how do you think this shall affect my business on the short/long terms, and what is the best I can do in this regard.

Thanks.

The suggestions in the article sound good. however it is easier said than done. The steep inflation does not encourage the entrepreneurs. Small businessmen may have to leave business and watch the biggies fight it out.

The inflation seen this time may continue to be stay here for quite some time. This will make all organisations to change their business models and strategies to survive. This is the toughest "Survival of the fittest" test the comapnies need pass!

Try to contact any Argentinian older than 40 years, who has passed (and survived) through different kind of inflationary processes.
We have known hyperinflation, stagflation, mild inflation (less than 2% a month, mild for us of course) and also ten years of stability.

Some experiences :

You need 'extra speed' to read marketing changes and discover new marketing opportunities and threatens

Your organization needs extreme flexibility to be able to change accordingly.

You need to adjust your computer systems to reflect 'really' on line any minor change in price of supplies or your sale prices.

Be careful, your accounting systems may show ficticious profits, measured in 'volatile currency'.

Increase confidence with your suppliers so that you can know price increases in advance, so you can purchase with an extra gain.

Increase confidence with your clients and let them know price increases in advance, that will increase they loyalty.

hi sir,

the topics you presented were very interesting specially during this time of continued price increase in most of all commodities. It will give an idea on the side of the businesses how to do away with a lot of threats including the high inflation rate. Customers should be on top of consideration if you want the business to stay long.

Knowing and understanding the customers should be the first step before going through series of implementations like for instance: the price structure, product concept, promotional activities, to name a few.

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Sir, can you help me? Do you have knowledge about this vitamin C known as - Alka Cee. This has been recently offered here in our country, through networking and this has not been widely distributed through pharmaceutical outlets.

Since, our country is facing downward economy that often results into price hike increase in all our basic commodities, and i take sometime to think for a while, whether this product "Alka Cee" becomes hit in the market.

My objective is how to sell it in volume? since it requires personal contact with the customers as a way of marketing the product. Can you give me some advices on how to begin with. Thank you.

Hi,
This is the first time I joined in this article and I consider it is really ultility for brand new marketor. It provided many new ideas and useful knowledge about this field. In addition, I also learnt alot from all comments. So, could you give me some basic knowledge about contemporory Marketing?
Thanks in advance

hi, the advice you have given to the businessman is great, the idea that you can maintain the sale even in high inflation.
in this context i want to add that in times of inflation the best pactice, for the retaining of the customer, is the enhancing the quality of the product and adding up the features in the product, such as in soft drink industry introduction of new flavors etc, can prove better results.

Hi John,

Different consumers percieve inflation and its impact differently. Understanding their perceptions will give clues for managing price rise.When there is information overload in the media a 5 % increase in raw materials can be effectively translated to 10 - 15 % in your final product and consumers may not necessarily react. Sometimes increase price but give discounts in round about manner like volume discounts instead of price discounts when you know the customers buying trends.

Another way is to work with the customers to reduce his cost.This will foster good relationship between customer and vendor for a win win situations. Then passing on the price increse is easy.

Having transperancy with the customer is another way you can tackle the price rise.

N.Sushil Kumar

Sir,
Steep rise in price may only be managed by:
1. Both the consumers especially middle & lower income group which are hard hit by this trend by reducing their some unwanted needs and desires & Government by cutting their overheads.
2. strict measures and punishment for hoarders and blackmarketiers.
3. Companies as a social responsibility,also reduce their profit margin as the end user get the products 5 times higher price compare to production price.

Prof: These are truly good pieces of advise. The first tip, "Understand Your Customers" is as much an advice to the marketer as to the consumer. Being in Africa (Zambia) where income poverty is higher than say, in America, I would expect consumers here to be more price sensitive than out there. With regard to fuel prices, my initial observation is that Zambian motorists seem to be responding in many of the ways you have suggested except one: switching to public transport. The reason for this could be that a good number of them have just bought their second hand (Japanese vehicle) in the past one or two years when our economy has shown some positive signs and are, therefore, unwilling to part with their new found convenience of driving to work in their own car.

suppose there are two party namely "X" and "Y"

"X " party are already in the market since last 10 years and party "Y" has developed a new product and they are enter in the market within few days. each party makes a same product for example: pharmaceutical tablates chemicals. each part's product quality, features, packaging all are same but price different. now party "X" are selling their product of Rs.700 per kg and credit terms after 60 days. and new party "Y" are selling their product of Rs.800 per kg and credit terms in advance. now suppose "Z" is the customer of "X" and consider you are the "Y" and you are selling your product to "Z", at Rs.800 per kg and you have to sell 2000kg, so how can you convience to the "Z" to buy the product ? ( is already customer of the "X")

i hope yo will give me a answer.

Commodities like gasoline, where the manufacturer adds little value before the product reaches the end consumer, are more vulnerable, while sales of the most exclusive global luxury brands hold up pretty well regardless of price.

I couldn't agree more. I took a day to monitor consumers for a project that I was working on and I noticed at a local shopping mall there was hardly any traffic. It was just plain dead!! I went to a high end mall that specializes in high end luxury brands and they were BOOMING!!

Hi Everybody,

I think, now the companies are smart enough to cope with the regular inflations and price rises.

What i have noticed offlate is, companies have started concentrating more on the packaging rather than any other measure to counteract inflationary measures.

What John mentioned in the post about the soda can is truly the way to go, Companies know that off take of products at 1,5, or 10 is always higher and accordingly they curtail the quantity according to these price points.

And they bet big on smaller packs in order to make sure they get desired volumes, Soda cans always outsell the 2 liters and higher counterparts.

Co.s often launch customised packs, not the regular 500 or 1kg packs,they may launch 425 gms or 900 gms in order to make sure the customers dont feel the pinch of higher prices but pay the same price at the end of the day.

Cheers...!

Varun Badhwar

Good Day Respected Forum Members ,

Hiking Inflation has been a major concern for Transportation Industry especially international Oil prices which cause Shipping lines Million Dollar losses by relatively a substantial increase in price of Oil in international Market .However different Shippers/exporters tends to show different behaviours towards increase in Ocean freight .So far my experience shows that whenever a price is increased its absorbed by customers in two Conditions ;

1)If inflation is imposed to Customers by over all trade

2)Brand name decide Customers reponse towards Potential price increase .

However Keeping in view FMCG Industry its always very important to reduce price of Goods but cutting Packaging & even Promotion costs to reduce burden on shoulders of Customers

Good afternoon to those of you who work hard to make this HBR a mandatory read if anyone likes to really learn economics topics.

From my experience at the National Bank of Cuba as an International Finance Analyst, I had to deal with how to improve the economy performance specially the Cuban peso. The big problem with the Cuban economy is the lack of trustful tools to measure how costly it works, and here is one side of the problem, the other side is that the Cuban peso has no purchasing power, or a very weak one.

The cuban peso can only buy a very reduced range of products like the goods sold at subsidies prices which are less everyday.

The convertible cuban peso has a high price to buy with the cuban currency, the salary average in the inland is around 250.00 pesos and the exchange rate is around 23.00 pesos per one dollar.

We can see how badly the workers can do with the salary being paid at their jobs.

The Cuban economy after the collapse of the Soviet Union and the rest of Eastern Europe economies was caught off-guard and something called the "Special Period"(Periodo Especial) started to be implemented. In essence was more of the same, more seat-belt tightening but this time a really tough one.

Once the cuban peso started to be exchanged at high price ( In Varadero Beach it reached up to $200.00 per dollar)the poverty grew to alarming levels, the government decided to sell dollars bringing down the peso value to a level of $8.00 but once again the main problem, the cuban peso purchasing power was almost none.

Workers in jobs where their salary was miserable started to quit or to be fired and decided to earn dollars in the "black market",so there was no stimulus to work for the state. The "Boom" of the early 60's brought a high number of young people to study and to work, but there is no employment for them, forcing cubans to leave the country and go to leave to other places.

The idea is that if there is not enough employment let these people live outside and allow them to visit the inland and leave dollars behind, as well as the money sent to them during the year by relatives( Miami's families are heading in that direction).

Why all of these explanations?

I'm not trying to sell a Cuba bad image. I don't need to do that. The 50 years of the cuban regime have created this picture.

Now back to business, the classic theories of market economies developed by Milton Friedman( Nobel Prize in Economics), champion of new liberalism coming out of Adam Smith classics,cannot be implemented in the Cuban economy like we know today.

The marketing ideas to reduce inflation damage in the cuban economy cannot be implemented because of a "rare economy structure" design to work around the regime and absorbed any income in dollars no matter what the consequences.

So we need to go over how marketing may work in an ecomomy as that one, we may enrich our vision of marketing to reduce inflation,it may work in America but not in the cuban economic base and may also help to understand South American economies and be more close to their specifics so the International Monetary Fund can be more realistic in their solutions.

Once we can use these marketing principles in an economy that is heading down the ladder, once the current structure may be changed, the cuban people may benefit from economic freedom as a first step towards political fresh ideas to allow cuban workers be motivated to work hard and earn enough money to live a decent life.

Sincerely,

Julio R Gonzalez Jr

15470 SW 74th Circle Court #906

Miami, Florida 33193-3353

305 752 2957 (Home phone)

Dadetraffic19@bellsouth.net

Hello to the Staff of HARVARD BUSINESS PUBLISHING:

As I was pointing out in the last comment I shared with you that marketing ideas in a high-centralized economy, where any income in dollars has to go to an account, which at the same,is owned by the regime to have enough reserves in dollars to finance adventures taking the domestic economy to poverty levels not seeing before in Cuba short history.

Here may be one problem.

If the cuban peso is worth-less, because it has no purchasing power, that means inflation, why? Too much money in circulation and without a counter-part in goods and products create a gap between cuban pesos and products that cannot be bought by the cuban population.

Another factor:

The dollars circulating in the black market are the real currency to survive for cuban workers, but the government pretends nothing is happening and the famine of the population continues to hit hard those ill-prepared to face a situation like the one that the domestic economy is going through in Cuba.

How can this be modified?

I was pleased to see how cuban are signing a petition (more than 10,000 signatures) asking for one currency only: the cuban pesos.

Now is not that simple.When all the enterprises who do business with dollars need to deposit all income on a daily basis, they would not be able to save for paying more to their employees.

One way to give the workers their share of dollars produced by them, things may work in a different way.

The enterprises who export raw materials or any other merchandise in U.S. dollars they could have paid their employees a percentage of the net income so they can remain healthy and live a better life.

So the enterprise may increase the percentage of dollars paid to workers if the enterprise improve their performance and there is when the cuban pesos will become convertible, in other words, the cuban pesos will have purchasing power.

This doesn't mean we finally won the battle. If there is a bad performance by the company and workers responsability is strong, the percentage may be reduced according to which worker was lazy and who was not, in other words, good performance will be rewarded and bad ones will have to experience a reduction in their finance resources.

Now like there is less pesos in circulation than dollars there is another factor for inflation, the cuban pesos will not be supported by a reserve in dollars so that means less consumption and less investments because there are no savings.

Sincerely,

Julio R Gonzalez Jr

Dadetraffic19@bellsouth.net

hi, i thought this link was timely to your post

http://neilperkin.typepad.com/only_dead_fish/2008/07/bogof.html

What advice will you give those in Zimbabwe with monthly inflation of 800 percent and annual inflation above 11 million percent? Economy of shoratges, controls etc

I totally agree with you on Unbundle. When times are good and consumers are more generous, more is value. However, today it has changed to minimum basics.

Market research should be segmented differently too, no longer on desires and wants but on price sensitivity.

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