Issue link: http://psai.uberflip.com/i/1171504
W EEKLY EDITION SEPTEMBER 25, 2019 Pri ce W ar s: Tact ics for Competi ng Aga i nst a L ow - Co st Com pe ti to r (P art III o f a s er ies ) By Karleen Kos, PSAI Executive Directo r • Respect your Customers. The point of a price match policy is to signal the market that competing on price is not going to work; you prefer to compete on other aspects of delivering value. It works against you if you end up in tense situations with customers over minor details. Th e worst thing you can do is get into contentious exchanges with your customers over small amounts of money. While you certainly want to protect the best interests of your company, you can "win the battle and lose the war" that way. Do a good job and win th eir loyalty. That will pay off more in the long run. Option: Bill your rates as "everyday low pricing" or "hassle - free pricing" and compete on quality. Tactics like these send the signal that you have no intention of changing your prices to align with th ose of your competitors. In short, they are simply a way to tell competitors and customers that you prefer to compete on value rather than price. Here's a recent example from another industry. Auto dealers are known for haggling on price down to the very last floor mat and mud flap. Some customers love the thrill of shopping and dickering for a new car, others hate it. Here in Minneapolis there is a dealer that advertises, "hassle free pricing." If you get a quote from them on a vehicle, it will typically be 1% to 5% higher than the best deal you can get on an identical car elsewhere in the Twin Cities. However, you save time and emotional energy with the hassle - free price. The dealership has longer service hours, a better vehicle selection, better in - hous e warranty protection, and a guaranteed trade in value. If all you care about is cost, you'll buy from their competitor. If you care about those other things and want a dealer you can trust, you'll buy from the hassle - free people. Obviously, they don't sel l every new car in Minnesota, but that particular dealer is enormously successful. Of course, the margins are a lot wider on new cars than on portable sanitation, so the two things are not exactly analogous. But conceptually you can see how the idea works. You signal to one and all that your prices will be fair but not the lowest around, and then you make sure you can show customers why they should be willing to pay the higher amount. When they are happy, you do everything possible to keep them coming back and providing testimonials about the value you reliably deliver. Option: Alert customers to the risk and other negative consequences. Ano ther way companies can avoid a price war is to alert customers to risk — specifically, the risk of poor quality or potential issues with a competitor's operation. You may not want to mention a competitor by name or appear to be calling them out; that's certa inly commendable. But there is nothing wrong with having a sincere conversation with your customer and helping them understand the risks involved in accepting a lowball competitor's bid. Explain things like: P AGE 10 CONTINUED ON PAGE 11