As prices are going up, some companies decide to charge less

6 06 2011

We have pretty much gotten used to the idea that we have to start spending more money on our everyday items like gas and groceries. It is a breath of fresh air to learn about some companies deciding to actually decrease the amount they charge for their products.

A recent CNN article about companies lowering their prices, it highlighted that Nectar of Life coffee brand reduced its Coffee Club price by roughly 15%. This is extremely significant, especially in light of the fact the coffee prices have more than doubled in the last year. In response to rising expenses, coffee brands like Starbucks, Dunkin’ Donuts, Maxwell House and Folgers have all raised their prices.

Why would companies like Nectar of Life decide to decrease prices? In addition to them feeling that they could still operate on a smaller margin, they would hope to build a customer base. It’s a fine line to walk though, some customers may fear it is only a marketing ploy and decide to not purchase their product, while on the other hand customers may decide to try a new product they wouldn’t have and this could create brand loyalty.

I think this is a great move for some companies, albeit risky… what do you think?

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