March 6, 2023

Why flogging cheap prices is a terrible strategy and should be stopped

Source: Unsplash

Why flogging cheap prices is a terrible strategy and should be stopped.

Why is competing on the basis of low prices actually bad marketing?

How is the game played?

▪️It can be a reaction to a short term dip in revenue, with the belief that lower prices will attract more business and prop revenues back up.

▪️It can be a vehicle to promote a particular product or service that is running below forecast. The intent is to get the customer’s attention with a slashed price and hope that sufficient sales volume will stimulate sales.

The most common play, however, is a ‘me too’ response to a competitor’s move. The competition drops their prices and the marketing analyst thinks they must match or undercut the competition to prevent customers from leaving.

At the end of the day, those who price cut trust that this strategy will make their business better off, that somehow they will gain a market advantage in the long run.

The irony of a business reducing their prices in response to a competitive move is that the business is really allowing the ‘bad guys’ to set their prices.

Why would any business allow their competition to set their prices? Does that make sense? Certainly not!

And the benefits of slashing prices, in any event, are illusory or short term at best. Sales revenue may spike up in the short term but it comes at the expense of lower margins unless costs can be reduced at the same time (which rarely happens).

Price cutting has no strategic value

Reducing prices never enhances your long term market position.

It contributes nothing to differentiate you.

It doesn’t make you special or unique in the eyes of the customer.

In fact it has the opposite effect. It shouts out your status as a commodity player who is interested in providing little more than low prices. Price floggers are a dime a dozen; you will not likely win this game. You might keep your head above water for a short time but sooner or later you will either hit the margin wall, or some gunslinger will come along and lower their prices again.

And the race to the bottom is on.

Stand-out marketing organizations learn to manage market share and profitability by maintaining prices higher than the competition.

Here are 3 actions you can take to avoid the price cutting game that leads everyone to the bottom.

▪️Set your priority to manage market share and profitability by focusing your efforts on high value customers where profitability is healthy. Let competitors have the low margin segments.

▪️Resist the temptation to lower prices across the board in favour of targeting price programs to specific vulnerable market segments. In the face of the competition entering long distance markets at prices 15-20% lower than incumbent telephone companies, flat rate packages (like 100 minutes for $10) were introduced for heavy users at a premium to the competition. It worked.

▪️Focus on creating additional value to support higher prices for your products and services. Offering product packages and added customer service features are ways to keep prices higher than the competition.

Stand-out marketing organizations are premium price suppliers and they win.

They are rewarded with fans who love them and spread their word to others because they’re worth it.

“The reason it seems that price is all your customers care about is that you haven’t given them anything else to care about. “ — Seth Godin, marketing guru

Ponder these questions to see if you’re playing the price cutting game:
— What’s the conversation in your organization: is it about how to add value or reduce price?
— How frequently do you have special promotions that reduce prices?
— When you talk to your customers, what’s the main message: your low prices or your premium value?
— Do you offer product or service bundles with price discounts for buying more?
— How many initiatives do you regularly have to add value to your offerings and increase price?
— When you compare yourself with your competitors, is it mainly about price?

Price = $0.00 means you offer no value.

Is that really where you want to be?

Cheers,
Roy
My 50+ Podcast Shows that will change your life.

Check out my BE DiFFERENT or be dead Book Series

‘Audacious’ is my latest…

• Posted 3.6.23 at 05:13 am by Roy Osing
• Permalink

November 21, 2022

How the competitive herd runs and why it will destroy you

How the competitive herd runs and why it will destroy you.

Competition, regardless of the industry, is increasing with blazing speed. Fuelled by disruptions caused by the internet and hard-technology innovation, the number of competitors entering ANY space is increasing at a breathless rate.

You would think that in the face of relentless competitive pressure, organizations would get more proficient at carving out a differentiated position in their market. Creating a Value Proposition that is crystal clear and unique.

But, it is not happening. In fact the opposite is occurring.

Un-differentiation is the norm.

Business is infatuated with copying.

Best in Class and Best of Breed are targets for comparison.

Benchmarking is the key driver of ‘innovation’.

Follow the Leader is played with the belief that somehow a Stand-Out competitive claim will evolve. It just does not happen.

Products and Services end up on most organizations’ infatuation list. Me-too capabilities are promulgated in the market with the hope and prayer that a miracle will happen and THEIR solution will end up being the winner.

Product features and benefits are stressed as the panacea to the customer’s wants, desires and cravings.

Mass markets are catered to, driven by a one-size-fits-all marketing mentality.

Product corners are rounded, believing that incremental changes will make the product appeal to more people. Problem is, this strategy results in the product appealing to no one.

Businesses rush to offer lower prices than their competition. Everyone is in this game to a degree. It seems to be all about a race to the bottom on price for The Herd.

The Bottom line… The world is burning with a growing competitive flame yet organizations are NOT very good at establishing a clear, relevant and unique claim that clearly distinguishes them from their competitors; that makes them Stand-Out from everyone else.

The solution?

Build your business around my Strategic Game Plan process and use The ONLY Statement to carve out your unique position in the markets you choose to serve.

Cheers,
Roy
40+ Podcast Shows I’ve done that unpack my work.

Check out my BE DiFFERENT or be dead Book Series

‘Audacious’ is my latest…

• Posted 11.21.22 at 03:17 am by Roy Osing
• Permalink

November 7, 2022

How audacious marketers create amazing experiences for people

An experience is rarely one-dimensional.

It virtually never consists of a single element. That’s why a single product or service can’t deliver. It’s narrow; provides only a slice of benefits.

Experiences are multi-dimensional; they are a manifestation of a person’s holistic reality.

Every person’s life is complicated; it can’t be explained by a single variable.

“Who is Roy?” can’t be answered without considering his total life; work, family, friends, recreation, political ideals, personal network and so on.

If you don’t treat a person as a holistic entity, you won’t be open to the full array of ‘Secrets’ that will unlock the experiences they crave and hunger for.

That’s why the ’Experience Manager’ position is so important in Storm Marketing. They operate above the product cloud.

THEY are accountable to define the robust profile of a person; the bank of Secrets and Cravings they possess.

Are you concerned about your customer’s total life or only a small single slice of it?

Think about it:

▪️Do you have a holistic lens to determine what a customer covets?
▪️Are you in the Secret discovery business or not?
▪️Are you still possessed by the notion that product benefits describe what will make someone happy?
▪️What do you know about the lives of the people that do business with you? What does your holistic check list look like?
▪️If you have Experience Managers, nice; if not, WHY NOT?

Cheers,
Roy
40+ Podcast Shows I’ve done that unpack my work.

Check out my BE DiFFERENT or be dead Book Series

‘Audacious’ is my latest…

• Posted 11.7.22 at 05:31 am by Roy Osing
• Permalink

October 31, 2022

Why competitive advantage, as taught by most ‘experts’, is usually (mostly) wrong

How to declare a competitive advantage, as taught by most ‘experts’, is usually—mostly—wrong.

This article is typical of how people are taught to create a competitive advantage for their business.

“Crafting Your Statement — Your statement of competitive advantage has four components: your name, your company, a statement about a problem in your market, and how you and your product solve that problem.
Essentially, it is a 30-second statement explaining what differentiates your company in the marketplace.”

This author teaches us that if we have a solution to a problem, it—our solution—defines our competitive advantage. And in the last sentence it concludes that this four component statement “…differentiates your company in the marketplace.”

BOOM. PROBLEM SOLVED. EASY-PEASY.

WRONG.

This approach is not only an oversimplification, it’s misleading.It DOESN’T establish competitive advantage in any way, shape or form.

And, unfortunately, the approach is not an isolated example of how businesses are being coached on how to define what makes their organization unique and special among their competitors.

And I would say 99.9% of the ‘experts’ out there promulgate the same type of gibberish.

If I come up with a solution to the distracted driving problem does that automatically mean my solution gives me a competitive advantage?

“YES”, the previous ‘experts’ would say.

“NO”, Roy says it’s gibberish.

All it means is that you figured out ONE solution among many to the distracted driving problem. Your solution doesn’t give you ANY advantage, for example, unless it’s unique in some way compared to what other solutions are out there.

Where is the notion of solution comparison to the competition in the gibberish? It is MIA. Not mentioned. Not important apparently.

Look, the gibberish is helpful to a point. It correctly advises that you must find a solution to a problem that someone has if you want to have a chance for success.
Find out what’s keeping people awake at night and find a solution to their dilemma and help them rest.

That’s a good start. But it’s not the end which the gibberish implies.

You need to determine HOW to make your solution DiFFERENT from everyone else’s solution in a way people care about if your solution is to ‘have legs’ in the market.

So, let’s transform the gibberish advice into something meaningful and relevant.

“Crafting Your Statement — Your statement of competitive advantage has four components: your name, your company, a statement about a problem in your market, and how you and your product solve that problem in a way no one else in the market does.
Essentially, it is a 30-second statement explaining what differentiates your company in the marketplace.”

Your takeaway from a guy who took an early stage internet company to A BILLION IN SALES — create solutions that standout and are unique among the competitive hordes if you want to be honest with yourself that you really DO have a competitive advantage.

Ignore the gibberish.

Develop The ONLY Statement for your solution.

“Our solution (brand it, like ‘Distracted Driving Resolved’) is the ONLY real solution to the distracted driving problem killing the lives of millions of children, parents, grandparents and friends each year.”

Cheers,
Roy
40+ Podcast Shows I’ve done that unpack my work.

Check out my BE DiFFERENT or be dead Book Series

‘Audacious’ is my latest…

• Posted 10.31.22 at 05:16 am by Roy Osing
• Permalink