You Do Not Have To Compete On Price
By Dean McNamara
You do not have to compete on price to build a successful business.
One of the fallacies that many business owners fall into is the belief that they must be cheaper than their opposition to make sales.
The fact is - you do not have to compete on price.
You only have to compete on price if you choose to compete on price. The secret to running any successful business is choosing your own battle ground. Do not be suckered into competing with your opponents on their chosen battle ground. If they have chosen well, then it is unlikely that you will stand a chance. If they have chosen badly it will probably mean the death of both of you.
Price is an important factor in anyone's buying decision, so being the cheapest will bring you customers. Massive turnover without profit will not make you rich however.
If your competitors have better bulk buying power, or they have cheaper sources than you, you will never successfully compete with them on price. Many times you will see big companies drop their prices for an extended period of time just to shut down as many smaller competitors as they can. Once they have a monopoly, or significant market share, they will raise their prices once again. This only works if you have the resources to be able such a price war.
So how do you compete if you don't have the best prices?
Price is only one of the factors a person will consider when making a purchase. There are many other factors. Some of the factors most likely to influence a buyer are service, quality, and exclusivity.
Service still plays a vital role in many people's choice (although some companies obviously believe differently). If you can provide the most personalized service in town you will win customers. If you can provide extended service hours beyond those of your competitors you will win customers. If you can provide faster, more frequent, or more convenient service than your competitors you will win customers.
Quality will always be a priority for many purchasers. They want products and services that are the best, not just for prestige, but because they know that it will save them money in the long term. Better products can lead to more productivity, less down-time, better a better quality job. Better service can mean a job done faster, problems fixed in the first call-out, problems identified early and maintenance scheduled before a costly plant breakdown. People will buy from you if you offer the best quality product/service - and pay more for that quality.
Exclusivity is often only associated with the fashion world. But many astute manufacturers have built empires on this marketing tactic. Brands such as Rolls Royce, Harvard University, and Gucci carry the exclusive badge. Although you don't have to be the most expensive to be exclusive (and depending on your business being the most expensive may not be the best option). When Henry Ford started automobile manufacture a customer could have a vehicle in any color they wanted as long as it was black. If you were a hapless soul trying to impress a lady in a sea of black automobiles, having a red car would have been a distinct advantage. In those starting a car manufacturing plant where the customer chooses the color would have been an exclusive marketing feature - the ONLY company offering the customer the choice in color.
Market your unique selling point (USP), or the battle ground that you have chosen for your business, is the next essential step. It is one thing to recognize your point of difference, but if your customers don't know about it they cannot factor it into their buying process.
NZ Marketing Systems is a New Zealand Marketing Company that specializes in helping business find their unique marketing niche, and then helps those business market themselves in a cost effective manner.