Issue link: http://psai.uberflip.com/i/1164957
W EEKLY EDITION SEPTEMBER 11, 2019 Pri ce W ar s: Don't be Tak en Pri soner Par t I By Karleen Kos, PSAI Executive Director Company dynamics such as cost structures, capabilities, and strategic positioning should also be examined carefully. For instance, the company that is competing on price will almost certainly have weaknesses. Is it slow to respond to service calls? Is its service substandard compared to yours? Do their drivers have so many stops they rush through their jobsites and fail to build relationships? Meanwhile, a smaller company may be able to relate personally to decision - makers and engage in individualized problem - solving. Having the owner's phone number and a fast turn - around on issues is worth a lot to many customers, espec ially if they are faced with a crisis and the centralized answering service for the bigger company isn't being helpful. The point is this: no portable sanitation company of which we are aware is BEST at everything. That means all competitors have the oppor tunity to figure out how their own strengths can be used to level the playing field so that price isn't the only consideration. • Know What Makes Your Competitors Tick . It's easy to see a competitor of any size and form opinions about them. You may be basin g this on equipment you've seen on sites, comments from customers and end users, or even based on your own knowledge of the company leaders. All of that is well and good as far as it goes. But don't let it blind you to the important insights you'll get fro m a more studied analysis of their companies, specifically paying attention to the elements of their costs, organizational capacity, and strategic positioning. Quite often unprofitable price wars happen because a competitor thinks they see an opportunity to increase market share or profits by lowering prices. In doing that they overlook the fact that other companies in the market will respond. The price - cutter's initial market research may suggest the new sales they'll get after a fee reduction will justi fy the action. It usually doesn't estimate that competitors will have pricing responses. Businesses need to pay attention at the strategic level to the related questions of who will respond to price cuts and how. If you are thinking of starting a price war because you believe there's money to be made on volume at lower prices, be sure to take into account that others in the market will respond to your actions. What does that do to your business projections? Smart company leaders appreciate the need to und erstand and empathize with the competitors in their markets. They project how competitors will adjust their prices by looking at past patterns, by discerning which events have caused price changes in the past, and by tracking the timing and degree of price responses. P AGE 10 CONTINUED ON PAGE 1 1