There is an interesting article which raises important questions about brand equity and cost cutting during a recession.
We feel also that in the services area it is critical to offer temporary price cuts while insisting on the “true value” of the services. Why this is important? This can become one of the key components of deflationary trend which will permanently change correlation of services and products value vs consumer demand. In its turn, this can lead to more pressure for small business owners aiming to grab any possible discount at all costs and thus reducing the quality before all. Corporate clients are less likely to get into the same trap, but for any start ups and small business owners we fee it is critically important to understand that the service industry works similar to correlation of expertise vs happiness. Take out happiness of the provider and there will be less quality. Higher the expertise, higher the value and cost. No economic shifts should change this dependency. Of course cost cutting is a pure necessity if everyone around does the same, problem is that what is the starting point? There are many tiers of providers in different areas and now is the time when shifts from tier to tier may occur. Suddenly companies with higher cost may start being perceived as more expensive brands and ones that were expensive, but cut costs may enter different market. In ll cases, online marketing and print promotion remains critical to communicate latest promotions. Those companies with less promotions can save money on marketing while others that cut costs will need to spend more on the promotion of the deals themselves.