Why competing on price is short-sighted

Competiting on Price is Short SightedIt’s easy. And, I’ve been there.

On the side as a business owner, bidding on a project with the focus on price ‘just to get in’ and as an employee, being part of a price war, where no one wins. It is easy to compete on price.

Yes, there is a pricing strategy where you go in low but this a short-term strategy. It is always supported with other elements, like loyalty programs, product bundling and limited features.

You now see these software companies who offer a free product or service option.  It blends two strategies, pricing and penetration. The objective is to get as many people as possible using their free product with the assumption that a percentage of these free users will eventually turn to paying customers. These strategies include a heavily investment in demand generation tactics, quick follow-up by email once you download a free report and an aggressive social media and email marketing programs.

Just give the companies some time and you will see them adding telemarketing. (Folks, everything goes back to hard-core sales.)

Today, coaches, bloggers and nutritional consultants takes this strategy in a more simplified form and calls it, list-building program.

But, let’s return to traditional B2B industry, the manufacturing, aircraft maintenance, printing and support services industries. If you find yourself consistently reviewing the competition, needing to know their pricing and always, near then end of the negotiation process cut your price, this is a signal that you need to improve your product offering. In doing so, you can develop a clearer brand position.

If you find yourself with the type of clients who struggle to pay or spend only pennies, this can suggest that you need to invest in solid sales people who will go out and get you the right customer. These types of clients actually waste your time.

You maybe surprised about what a great sales person can do for your company. Not only do they have first-hand information about why your key target customer doesn’t buy from you, they will also help you develop the right products and services to win them over. That’s because a great sales person wants to win!

What about the classic, ‘me-too’ company. There are many of you and this is where we come in and define your brand position and pound out that message until doubt turns to perception turns to truth.

As I said, I’ve been there.

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