Succumbing To The Temptation To Compete On Price?
Resist it, if this is your sole strategy. It’s true that prices may come down as competition grows fiercer for the consumers that still have money during this tough recession. However, if your sole reason to reduce prices is to get more customers, this strategy is doom to failure. For one, it’s not just a matter of people having less money to spend, it’s also a question of getting the best value for their money. If you don’t take the time to create a product strategy that embraces a holistic approach to marketing in bad times, you’ll end up doing what everyone else is doing – lowering prices. And, then whoever can withstand the loss of profit the most will end up winning more of the market share, but at a very dear price. That just simply isn’t a good strategy to build a business that can survive a recession and go on to generate long-term growth.
Remain Price Competitive
Don’t overlook the lowering of prices in your niche, however, don’t play the oneupmanship game that only leads to drastic cuts in your market. This type of strategy works short-term, but eventually it eats up too much profit and it trains your customers to hold on to their dollars until the next round of price cuts. If, however, you do offer some discounts and programs for loyal buyers, instead of just everyone who might drop by your online store, you train your customers to buy more and still get a good deal. So, if you really do want to compete on price, do so in a way that generates buying behavior, and not across the board for anyone that wants to freeload off your hard work.
Create A Perception Of High Value
Another way to compete on price, but not offer lower prices, is to heighten the perception of value for your products. Your products may cost more, but they are also worth more, and therefore deserving of a higher price. The way to do this is to offer more to your customers than they expect to receive for the price. If they expect an overnight stay for $120, and your suite is $150, then throw in breakfast, restaurant discounts, or a couple of tickets to an in demand production. Always seek to offer much, much, more than what your customer expects and they will continue to buy, regardless of the fact that you cost more than your competitor. Instead, they will look at you as the deal, and the others as the cheap version of the real thing. On line, the same thing can be done by including extra products in value packages that appeal to a price-conscious consumer. Just remember, that it isn’t really the price tag that is usually the main objection a buyer has towards purchasing a product, it’s more about the value they receive for the money they spent. So, make sure that they get more than their money’s worth.
