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.

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#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

RonnTorossian.com on
9/17/13, 10:15AM

 

Discover more from Ronn Torossian

Ronn Torossian’s Professional Profile on Muck Rack
GuideStar Profile for Ronn Torossian Foundation
Ronn Torossian’s Articles on Entrepreneur
Ronn Torossian’s Blog Posts on Times of Israel
Ronn Torossian on SoundCloud

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Ronn Torossian is the Founder & Chairman of 5W Public Relations, one of the largest independently owned PR firms in the United States. Since founding 5WPR in 2003, he has led the company's growth and vision, with the agency earning accolades including being named a Top 50 Global PR Agency by PRovoke Media, a top three NYC PR agency by O'Dwyers, one of Inc. Magazine's Best Workplaces and being awarded multiple American Business Awards, including a Stevie Award for PR Agency of the Year. With over 25 years of experience crafting and executing powerful narratives, Torossian is one of America's most prolific and well-respected public relations executives. Throughout his career he has advised leading and high-growth businesses, organizations, leaders and boards across corporate, technology and consumer industries. Torossian is known as one of the country's foremost experts on crisis communications. He has lectured on crisis PR at Harvard Business School, appears regularly in the media and has authored two editions of his book, "For Immediate Release: Shape Minds, Build Brands, and Deliver Results With Game-Changing Public Relations," which is an industry best-seller. Torossian's strategic, resourceful approach has been recognized with numerous awards including being named the Stevie American Business Awards Entrepreneur of the Year, the American Business Awards PR Executive of the Year, twice over, an Ernst & Young Entrepreneur of the Year semi-finalist, a Top Crisis Communications Professional by Business Insider, Metropolitan Magazine's Most Influential New Yorker, and a recipient of Crain's New York Most Notable in Marketing & PR. Outside of 5W, Torossian serves as a business advisor to and investor in multiple early stage businesses across the media, B2B and B2C landscape. Torossian is the proud father of two daughters. He is an active member of the Young Presidents Organization (YPO) and a board member of multiple not for profit organizations.