7 Compelling Reasons to Not Compete to Be the Lowest Price

Kind of like shorthand, in the space of a few numbers after a dollar sign, price can encapsulate a product or business's credibility in the eyes of the customer.

If the price is too high we may react by dismissing it, feeling insulted or laughing incredulously. If the price seems too low we may be spurred into action and pursue it, or we may react suspiciously and need other questions answering, or we may reject the offer dismissing it as incorrect or 'too good to be true'. But in some way, we do react.

Price is a call to action. It says to us: If you have got the money, you can have it -- do you want it or not?

But price is also about relationship.

For some businesses, aggressive pricing is the number one marketing strategy; it's what attracts customers in, and the reason they buy. These customers are attracted to the billboards and advertisements that scream LOWEST PRICES and WE WON'T BE BEATEN ON PRICE.

If you are tempted to try this price strategy you may find it pulls the customers but here are seven other things you may also want to consider:

1) Do you want a whole lot of bargain hunters as customers? Are they your target audience? If they are, is there a big enough population of them to support you as the margins are going to be slim.

2) This tactic rewards customers for placing the highest value on price as if price is all that matters. If you have no issues with mass consumerism, that's fine. If you have no plans to offer more in terms of quality, service, ambience, creativity, and you wish to disregard the environmental impact, and community aspects, of shopping then go with the 'We won't be undersold' tactic. Otherwise avoid it.

3) You giveaway your power to your competitors and suppliers; you run the risk of being manipulated.

4) Don't you want to retain ultimate control over your margins?

5) Can you be bothered dealing with the 'paperwork' and time and transaction costs of refunding money on a done deal?

6) Does screaming low prices at your customers give you the sort of customer, and the type of relationship, you want?

7) What do most businesses do before they go out of business? Answer: Drop their price. What message do you think your low prices imply?

Before committing to being the lowest price provider, ask yourself why are you doing this, and make sure you have a good strategic reason for doing so.

Article Source: http://www.content.onlypunjab.com

Jane Francis is the author of 'Price Yourself Right: A guide to charging what you are worth' [ISBN 0-595-38601-6] which is available at Barnes & Noble (US), WH Smith (UK) and at amazon.com. You can read more at her blog: www.priceyourselfright.blogspot.com

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