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Competition
Your competitors play a big role in determining the success of your pricing strategy. The number of competitors and their proximity to your business will affect what you can pay for your products, as competition means a choice that will replace your customers. The more direct your business is in competition, the less likely you are to manage your prices. Direct competition makes it necessary to differentiate the product so that you can compete on non-price points. So why do customers come to your store, brand, or product differently than the competition? What sets your product apart? The following five directions are good places to start to think about how your product differs from the competition:
1. Price. While you may not be able to compete with large warehouses, you need to be sensitive to the economic climate. During a recession, consumers are more careful about how they spend less dollars. What is your competition doing in this arena? What can you do? Perhaps you can pack products, give quantity discounts, offer frequent rewards for shoppers in the store, and more.
2. Value added. How much value does your product or service add to the customer? Is your product unique? Do you offer after-sales advice? Can you provide a one-time purchase for one need? Does your price reflect this added value? Do you link value added directly to your price?
3. Convenience. How convenient is your location and shopping hours for your customers? If your regular customer is a working mother, then you’ll need to open the school after you let your kids go to work, or in the morning and two evenings a week to relax. Consider the lifestyle of your customers and add convenience to them during the shopping process. Convenience is something that customers pay for.
4. Confidence. Do you have a family business that has been running for 50 years? If so, advertise this fact. If you’ve been on the team for a long time, this is where you can hit Walmart and other big box stores. Local testimonials confirming not only the quality of the product but also the service that accompanies it can be helpful. Your pricing strategy should include this strategy. The buyer pays more because your business is around caring for them long after the product is sold.
5. Member of the Society. Are you involved in the local community? Maybe you sit on the school’s evaluation committee or plant flowers in a local botanical garden. Demonstrate that you are part of your community and that you have planned to do so for a long time and are giving it back to the community. Customers may be willing to pay more for a product again, knowing that you are a good manager in your team.
All of these are factors that can help you show your customers how your product or service is different from the competition and how your price reflects these areas. Back to our definition, customers buy discounts. Make sure the benefits your business offers are greater than the benefits it provides to your competitors. Add prices to this process, but keep in mind that low prices are not the only factor.
1. Another factor in evaluating competition may be the proximity of your competition. The closer the competition is geographically, the more it will affect your price. For example, if there is a price difference of 10 cents per gallon for gasoline at two service stations across the street, who do customers turn to? Conversely, the same price difference between stations a few miles away may have little effect. Price competition is a much more difficult task for all businesses today because customers need to know more about your business five years before they know about you and your competitors. will be able to.
2. If you run a video rental business, then other video rental stores are not your competition. In fact, your competitors include movie theaters, sporting events, and even opera. Don’t think of yourself in the video rental business - don’t think of running an entertainment business because you’re competing for an entertainment dollar. Therefore, you need to control not only whether other video rental places are paying, but also indirectly or alternatively the cost of entertainment services.Today, more and more small businesses are facing stiff competition from large chains like Walmart and Target. Walmart has more than 4,000 stores in the U.S., employs 1.4 million people, and has 127 million customers shopping in its stores each week.
3. It’s no surprise that small business is intimidating. Can your small business compete? Of course you can. Probably not related to the price of the same items - disagreements have the economic advantage of mass purchasing and distribution, which can destroy a small business from start to finish as a result of a price war, but there are other areas, including small business. Topics we’ve discussed before are: value added, seeing yourself as a good community citizen, flexibility, a high level of product selection, high service, and diversity. Studies show that when Walmart enters any region, prices can drop from 1 percent to 3 percent, and sales can fall from 5 percent to 13 percent, depending on the business. However, in one study, sales of restaurants and home appliances actually increased from 2 percent to 3 percent when Walmart arrived in the city. The stores most affected by Walmart were wholesale stores. So how do you compete? According to a study in the journal Marketing Research, two main factors are important.
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