Tallahassee Marketing Spotlight:

Competing on Price 

Don't Get Caught In This Game!

By Coach Grape

A man is traveling Route 66 and is in the middle of the desert.  He sees a big tent up ahead and decides to stretch his legs.  The tent is run by an old Native American gentleman and it is full of pottery.

In the back of the tent there is a room filled with pottery and none are marked less than $1,000. There is one particular piece that stands out and it is marked $1500.  The traveler specifically remembers seeing this same exact vase in the front of the tent for $50.

He returns to the front of the tent and inspects the matching $50 vase.  Same size. Appears to be same quality. No imperfections, chips or cracks.

The man approaches the owner and says, "Did you know you have a vase in the back labeled $1500 and it is the exact same vase as this one labeled $50? Is that a mistake?"

"No," answers the Indian, "Some people want a $50 vase and some people want a $1500 vase."

I tell this story a lot. Especially if I think someone is selling themselves short or gives a quiet air of desperation when selling their products or services.  Many of my clients complain that So & So down the street is undercutting their prices and they don't know how that company can survive because we are barely breaking even now.  In reality, they are not breaking even at all. They are just desperate and undercutting is unsustainable and hurts everyone.

Deep discounts, offered by the seller or by a third party (like Groupon), train the consumer to demand a lower price.  The consumer thinks that you are making a profit no matter how much you charge, so why not another nickel less, then another dime less. Well if you'll take $5, you will take $4.95. A nickel isn't going to put you out a business. - But 1,000s of nickels might.

Many consumers love a good deal, they are even willing to sacrifice some quality and customer service to save a few dollars. But many consumers are not willing to sacrifice that quality, that service or that prestige.

You don't see Mercedes competing on price with Hyundai. Yet, Mercedes is still in business.

"Some People Want a Half Price Car,

Some People Want a Mercedes"

During this recession, a lot of people started going out on their own.  For men, I see a lot of handyman services, deck & fence, lawn service and car detailing. For women, I see a lot of photographers, custom cake bakers, and pet sitters.  These were former jobs or hobbies that they decided to pursue since it was difficult to find a new job.

I am not knocking this, necessity is the mother of entrepreneurship. I hope they succeed and grow. But, unfortunately, in most cases, they might be good at what they do, but they have NO business being IN business.

Many skirt the system by not getting licensed by the state, not registering their business, not getting the proper insurance and not paying income taxes on the income.  This allows them to undercut the rates of the legitimate businesses.

But what exactly are you getting?

I hear horror stories all the time, just recently I heard of a woman that wanted some remodeling done on her bathroom.  She found out that the guy in the classifieds would do it for a lot less than his licensed counterparts. Unfortunately, he asked to be paid up front so he could get the materials and he never came back.  So she hired another guy that was "Cheaper than the others" - lightning couldn't strike twice, right? This time the man started the job but would be absent for days, come do a little work for a couple hours, leave again for a week� you get the idea.  She finally called up the local contractor that quoted her in the first place.  They installed a beautiful bathroom within days and had to fix what the last guy messed up. All this to save... are you ready? $500. 

She actually lost over $4,000 when it was all said and done.

When you compete on price, you never win. Something has to get sacrificed.

Ask Yourself: Who is your ideal customer?

Preferably someone that is looking for quality and service and not a �good deal.�

How do you reach that customer?

You become the "Go To" expert on the subject.

How do you become the Go To Expert?

You teach, you speak, you write articles.  You have to be the one offering up the advice.

Many people say, "Well, I don't want to give away trade secrets"

I answer, "They are already given away for free - on the internet."

Take a look at Dave Ramsey, and his Total Money Makeover.  He writes books, then hosts a radio show telling everyone what exactly is in his book! 

People still buy the books, take the classes, come to his seminars and listen to his show. He is a multi-millionaire.

My point is: If you are not the one teaching them, then a competitor will be.  People don't necessarily want to do it themselves, but they want to know why they need it and, in this world of scams, they want to know they are not being taken for a ride. They want to research solutions and justify the purchase.

If you are not the one offering the solution, someone else is.

By being the one that offers the solution, you become a trusted expert.

Experts don't compete on price.  They also position themselves where they don't have to prospect for clients anymore, which means less cold-calling.

If you are the one writing articles, you will eventually be the one asked to speak at local events or to hold a seminar.

Which leads to more prestige. Which leads to more qualified customers. It is an upward spiral, but it does not happen overnight.

If you want to learn more about this subject, check out my other articles on Content Marketing HERE. Especially the one about The Buyer's Journey.

If you want to become an expert by writing articles on Tallahassee Grapevine � with support that comes with it, then give me a call at (850) 445-6592 or email CoachGrape@tallahasseegrapevine.com