Prices: Discounts in Times of Pandemic?

In the current complicated context, companies must reconsider their strategies so as not to fall into the error of making aggressive discounts, since they could affect the positioning of their products in the medium and long term.

Wednesday, April 8, 2020

Ariel Baños, a specialist in price management and founder of, explains some of the important conditions that must be considered when deciding to make discounts in an environment of high uncertainty such as that which has generated the current crisis of covid-19.

According to Baños, the idea of making aggressive discounts can be attractive, and even convenient, since the flow of money is very welcome in a crisis situation. The problem occurs later, in the medium and long term. The crisis due to the pandemic is not going to last forever. Eventually, companies will have to think about more than covering fixed costs, and attend to the violent fall in margins generated by the huge discounts announced.

The article adds that "... Price is one of the main references for the positioning of our product or service. It conveys a lot about our value proposal, and the confidence we have in it. In an environment of uncertainty, and this is certainly the case, a surprisingly low price can send the wrong message to my potential buyers."

Details of the conditions to be met in order to make discounts that benefit the company in the medium and long term:

1. Generating a positive feeling in our clients, which means that we empathize and want to help them in this difficult time.
2. Communicate that we also need help, but nevertheless we maintain our dignity and our principles, we are not "giving away".
3. Everything must have a limited duration and scope, conditions that have to be clearly communicated in advance.
4. Actions should not affect our positioning for the medium and long term.

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Central American companies and covid-19: How to face the new commercial reality?

We prepared for our clients the report "Information System: Covid-19 and Business Outlook" which helps companies to measure the impact that the crisis will have on their activity in the coming months and what opportunities will arise in the context of the new commercial reality.

Click here to request access to this report.

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When sales fall, changing prices and holding discounts and promotions is usually the first step companies take, but it is often done without considering the possible consequences.

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