Roy's Blog: January 2010

January 10, 2010

Why reduce price when you could add value and still make the sale?

So, here’s the situation: your price is $26.25 and our competitor’s price for the same product is $23.00. What options do you have to compete?

Your first choice is to reduce your price; this is the most common reaction. The problem is that unless you can reduce your costs of supplying the product all you do is reduce your margins. And, you have to prepare for another potential round of price reductions if your competitor decides to further reduce their prices.

I am not a fan of competing on price.

It can be easily copied by your competition and it generally eats into your profits.

Your second choice is to add value to more than fill the $3.25 price gap.

This is the practice that will not only set you apart from your competitors but will also give you the opportunity to enhance your margins. In addition, it makes it more difficult for your competition to copy your move.

VALUE differences are tough to copy; price is easy.


Here’s a personal example of how this works. Lets say you are an author and your on-line book price is $3.25 higher than your competition. Matching the competition is really not an option as your cost structure is too high. You don’t have scale and scope advantages like the big on-line book sellers. To compete, the only choice you have is to add value to your on-line offering that they can’t match.

So you might decide to add two value components to differentiate your offer:
- sign every copy of the book sold
- offer a 30 minute conversation with anyone who buys your book on any topic that interests the purchaser

Hard to copy. Adding real value.

Force yourself to look at adding value whenever you are confronted with a price difference. Resist the temptation to take the easy way out and drop your drawers on price. It generally doesn’t work and gives the illusion of an effective response.

Ask “What real value can I add to fill the price gap?”


Check out my BE DiFFERENT or be dead Book Series

  • Posted 1.10.10 at 12:02 pm by Roy Osing
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January 1, 2010

Marketers - 5 steps to create a value package

Developing and marketing PRODUCTS is the way most companies compete today.

Nothing wrong with this, but it’s hard to find a unique niche where your competitors won’t find you.

Product competition is always challenged with how to provide features others don’t.

Rather than the traditional product-centric approach, unforgettable marketing is moving to offering packages of value that reflect a broad holistic view of the target customer in terms of needs, wants and desires.

The key question is, of course, how do you move to the package creation mode when you have been stuck in the product-only gear for so long?

Here are the 5 steps to follow to create packages around your products and services.

5 steps

Define the core product

Start with your core product. It will be the anchor for your package.

Add value elements

Identify additional VALUE components that can be “wrapped around” your core product.

The choice of what value to add is based on what you know about your target customers. This is where customer learning pays off.

If you have institutionalized the process of continuous customer learning, you will find the choice of what value to add relatively easy. Added value MUST reflect a relevant and compelling customer need or desire otherwise the package will not resonate with the customer.

Resist the temptation to add too many value elements. Don’t complicate the Offer.

Choose three additional value components that present a consistent and seamless value proposition to the customer and a natural add-on to your core product.

If the value components are not synergistc and don’t work well together, your target customer group won’t understand the overall benefits your package provides.

Choosing synergistic value components is critical in package creation in order to present a cohesive theme to the customer.

If you are in the financial business, for example, with an anchor product of financial advice, you might consider additional value elements such as on-line self management investment tracking tools and quarterly financial management seminars which all play well together.

Or you might consider these elements wrapped around basic meals and accommodation.

Create the value proposition

Define the value proposition for your package. This is NOT a statement that simply adds together the benefits of each package component. You need to describe the benefit impact of all components working together.

In my example above, how might you define the collective benefits of financial advice, on-line tracking tools and regular seminars? You need to express the theme they collectively express.

How about something like “investment self-management”?

Value proposition

Brand it

Brand your package reflecting the value proposition.

There is no sense creating something new and not taking credit for your innovation. Too many organizations are into the bundling mentality where a la carte component packaging with discount pricing is used.

That’s NOT what I advocate.

Your new brand should reflect the collection of benefits provided. In the example that we have been using how about branding the package “The self-management Investment Plan”?

Premium price it

Price your package in terms of the market value provided.

Think premium pricing. Avoid the bundling mentality of discounting the package based on the number of components in it.

If you have hit the mark with relevant, compelling VALUE you should be able to command a premium price and realize healthy margins.

If you can’t price your Offer at a high level I would suggest you have not defined it well enough. Go back to the drawing board. Start over.


Check out my BE DiFFERENT or be dead Book Series

  • Posted 1.1.10 at 02:18 pm by Roy Osing
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