Issue link: http://psai.uberflip.com/i/1169394
WEEKLY EDITION SEPTEMBER 18, 2019 So You' re i n a Pr ice Wa r: Now Wha t? (Part II of a series) …continued from page 2 By Karleen Kos, PSAI Executive Director Another consideration on the customer end of things is this: are there customers you don't serve now that a competitor with different equipment or a different price structure might draw into the marketplace? If a new set of customers becomes part of the picture, how will that change the playing field overall? Is there any reason for you to make changes to pick up some of these low cost-focused customers? Or are you better off attending to the higher end of the market, making changes designed to win and/or retain those customers willing to pay more for higher quality equipment, service, and expertise? Company issues. Ideally you are well aware of your own firm's cost structures, capabilities, and strategic positioning. Whatever they are, you'll find things you can use to help you survive and thrive in a price war, and things that will have to be overcome. For example, if you have a strong balance sheet and low debt, you have options such as investing in new equipment and positioning yourself at the higher end of the market. You can also selectively compete on price with certain customers if you think that's a good idea. In this scenario you have the short-term resources to ride out losing a few customers, knowing you can probably win them back when the lowball competitor fails them. On the other hand, if you are already short on cash and tight on margins, your options are more limited. This doesn't mean you are doomed. It does mean, though, that you don't have the luxury of waiting things out. You will need a more active strategy. Know what customers and services are the best fit for your company's capabilities, and then develop an aggressive plan for growing these areas. Also think about whether there are complementary business lines your competitor is not offering. Whether you look at adding a grease, septic, or party rental business, or you decide just to do more with your current equipment such as offering pump outs to campers and hunters, doing something is better than doing nothing. Competitor issues. If you have been competing in the same market with one or more firms, you likely have a decent handle on the cost structures and business issues those firms face. New competitors might pose a greater list of unknowns, but you can make educated guesses about their businesses. You know what someone just starting is facing. You have access to other PSAI Members who can tell you what they've experienced when dealing with this or that regional or national firm. Do your homework. PAGE 12 CONTINUED ON PAGE 13