The risk of getting into a price war
As a general rule, the only person who ends up winning in a price war is the consumer.
Competing on price or reducing your prices, even if spending is down, is not always the answer.
People usually spend money on something because of what it will do for them, not because of the price. People usually don’t buy a product or service perse. They buy what it will do for them how it makes them feel, how it will make them look.
For example, people might buy prestige, security, status, convenience, business growth, comfort or reliability.
So don’t compete on price alone and don’t make that your unique selling proposition. Instead, market and trumpet to potential clients why your service and product is better and full of benefits. Remember, discerning consumers are happy to pay a premium.
Think about your marketing and sales approach. Are you selling what your product/service is, or what it will do for people? In sales we call this ‘selling the sizzle, not the sausage’.
Yes, there will always be a market segment that shop on price alone. Be prepared to lose that market sector to gain the rest of the market. People who shop on price alone can often be a disloyal bunch anyway. My experience is they can also be the most difficult or time-consuming clients.
Customer service, quality and ease of use will cause repeat business whereas competing on price is always far more risky. Identify what is (or should be) unique about your business outside of price and make sure this point of difference is communicated loud and clear.
This shift in approach and selling proposition is a key to unlocking long-term growth and profitability for your business.
What is the unique difference that your business competes on?