There’s an old marketing saying; “To live by price, is to die by price.”
Quite simply, this means; if you’re relying solely on discounting to be your strategy to attract customers, then it’ll usually mean the ‘death’ of your business – sooner or later.
In business, there will nearly always be someone ‘smarter’ than you, who can make or access your product cheaper than you can… or someone ‘dumber’ than you, who doesn’t know their margins, and will sell the same product for less than you.
You need to compete on more levels than ‘price’ alone, to succeed and prosper long-term. You see, people by their very nature are simple. And they make simple decisions. ALL buying decisions are based on one factor… and it’s NOT price.
The decisions your prospective customers and clients are making is simply… where am I getting the best VALUE? And they vote with their wallets. They spend their money where they perceive they’re getting the best value.
If you lose a sale to a competitor, it’s simply because the customer believed this particular competitor offered them better value for their money. And that does NOT mean the cheapest product or service.
Far too often, I hear business owners argue that they need to discount and compete on price… when it quite frankly isn’t true. They need to demonstrate more value. If you can demonstrate enough value, the price becomes less important.
To prove this, look no further than your own lifestyle…
Do you live in the cheapest house?
Are you driving the cheapest car on the market?
What about your clothes, did you buy them from the local ‘second-hand shop’?
How about your furniture, jewellery, cosmetics, sporting equipment, etc.
Rarely do you buy solely on price alone. That’s not to say you buy the most expensive either. Like everyone else on this planet, you base your buying-decisions on VALUE. Generally, you’re prepared to pay a little more if the extra features/benefits are important enough to you.
A point to remember here is, not all people value the same things. A tradesman buying a utility for work is going to have very different priorities to the customer purchasing their new Ferrari 350 sports car, or the father buying a new station wagon for his family. Someone walking into a fast food franchise is looking for a very different ‘dining experience’ to someone going to an upmarket exclusive restaurant.
Which one is right? They both are. It’s not a matter of ‘right or wrong’. They simply place emphasis of different priorities. The fast food customer may want speed of service. The fine diner may want a relaxed meal in pleasant surroundings with exceptional service… and is willing to pay extra for that experience.
So in summary…
First know your target market. Know what’s most important to them when investing in your type of product and/or service.
Secondly, know yourself and your business, and what you’re naturally best at.
And thirdly, look for the ‘common ground’ between what you’re best at and what your ideal target market most want. Then focus your marketing on clearly communicating your ‘value proposition’ (how your business specifically addresses the key needs and wants of your ideal target market).
Chances are, you’ll never please everybody (nor should you). But if your ideal target market falls in love with your business and what you do for them… you’ll have more business flowing your way than you can handle.