Marketing your product or service with a message focused on price is an easy formula, which is why we see and hear these kinds of messages all the time. Just attach a price point and a brief description to a product.
As long as you’ve done your research to confirm that your prices are lowest, people will naturally gravitate to the cheapest option and choose to do business with you, especially with surging gas prices and an economy that’s still in recovery mode. Right?
Well, not everyone can be Walmart, and very few local companies if any have the resources to make this business model work. Many struggling business owners think the only way to attract more clients is to lower prices.
This may result in a short-term fix, but a price-focused marketing message has some serious long-term drawbacks, and it’s helpful to recognize the difference between price and value.
Price Doesn’t Build Loyalty
Repeat business and brand loyalty are the result of cultivating relationships with your clients. Loyal clients like to do business with you because they know you, they like you and they trust you. You’ve established a value for your product or service. They believe in you and they’re confident that you’ll reward this faith in you by solving a real problem or filling a real need in their lives.
Is price probably a factor? Sure, but trust is far more important to these clients.
People who base their purchasing decisions solely on price care about one thing – the dollar figure. They’re probably willing to deal with a few headaches and a certain level of frustration along the way because they feel the price is worth it. They are the least loyal segment of your client base because they won’t hesitate to jump ship if they find a similar product or service at a better price.
A price-focused message basically says, “I’m telling you the price because I want to sell you something.” You may see a pay-off from a price-focused marketing message, but it’s likely to be short-term.
A message that builds trust and cultivates relationships basically says, “I can offer you something that will make your life easier, so I’d like you to get to know me better.” This results in brand loyalty, which is vital to the long-term sustainability of any business.
Price Is Easy For Your Competition To Duplicate
Quality and dependability of service. Product and industry knowledge. The ability to convey this knowledge to clients. A reputation as an honest businessperson. A good name and good standing in the community. These are all things that take years for a business to build.
If a competitor was determined to take on an established business in every one of these categories, it would take years of solid business practices and a major marketing investment to catch up. Ask the folks at Bing what it’s been like trying to put a dent in Google’s market share.
Matching price is a different story.
For an online business, prices can be changed in a matter of hours. For a traditional business, it might take a few days or a couple of weeks at most to update any printed materials. The focus of your marketing message, the main advantage of doing business with you according to your marketing message, can be neutralized almost instantly.
Do you lower your prices even further? How far can you go? More importantly, do you know how far your competitor can go? This competitor may very well have an inferior product or service, but that doesn’t matter to those who make their purchasing decisions based solely on price, and you’ve positioned yourself as the cheapest option, not the best option.
At this point, you either need to drop your prices again to regain your previous position or rebrand your business. Both are costly propositions.
Price vs. Value
Price is a dollar figure assigned to a product. Value goes much deeper. Value includes the quality of a product or service, the integrity and reputation of a company, the knowledge, education and trustworthiness of the staff, and a fair price, not the lowest price.
Depending on the type of business, value may include a lot of other factors that influence purchasing decisions, from a free consultation to a lifetime warranty. The all-encompassing value offered by a business is essential to developing lasting relationships with clients.
Does this mean you should stop having sales that feature price reductions? Of course not. But sales are most effective when they’re part of an overarching message that cultivates relationships and conveys the total value of what you offer.
This way, the price reduction is an added value, not the only value, and more likely to be perceived as a “thank you” to your clients than an attempt to sell them something.
What has been most helpful in creating brand loyalty for your business?
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You are 100% correct.. This new economy has completely changed buyer behavior which has forced retailers to adjust just to survive. A company trying to hold on to old values will have to be prepared to weather this long storm!