Why competitive pricing is not always the answer
When you are entering or expanding in your particular market, Ronn Torossian says it’s a mistake to depend entirely on price point to deliver customers. There are a lot of reasons why people believe price can save them in a head-to-head market battle. But there are many reasons this assumption can turn into a business-killing mistake.
Ronn Torossian, founder and CEO of 5W Public Relations, delivers three reasons why your price matters…but not as much as you might think.
#1 – Someone can always undercut you
Amazon.com is an interesting example of this phenomenon. Even on a site where they can certainly control the supply and, thus, the price point, independent sellers can undercut Amazon’s prices. The site still gets a cut of these sales, but not nearly as big a piece of the pie. They allow this setup because they still control the point of sale, but many other online retailers make this mistake without the clout to combat the loss. Torossian says retailers are always in danger of going up against competition that can undercut them at will.
#2 – Price is more about value
Price really isn’t about price. It’s about perceived value. When you are placing your product or service in the marketplace, you need to consider what the perceived value of that product or service is for your target market. Excellent public relations includes efforts to increase and control the public perception of value with regard to your products or services. If you can somehow effectively use target public relations to increase the perceived value of your offering, your business will likely increase whether or not you decrease the price. In fact, in some cases, lowering the price actually decreases the perceived value, thus causing you to move fewer units.
#3 – Value added can trump actual cost any time
“Value-added” aspects are those that transcend both assumed value and intrinsic value. These can be special offers, extra features, new upgrades or any one or more of a host of aspects, items or ideas that create special and specific additional value to your product or service. Seems obvious, right? Well, then why do so many products or services enter the marketplace without first considering the potential value-added opportunities? Ronn Torossian sees this far too often in his work.
“A client will come to me wondering why they are not doing well in the market and I will ask them how they are positioning their product. That’s when I hear a litany of the same ol’ same ol’ chatter that everyone uses. People, that just doesn’t get it done.”
by Ronn Torossian for