Add value, adapt, build trust rather than cutting prices

by Ashvini on October 16, 2012 · 3 comments

in Business

Business losses happen over a  long term period.

The reason customers buy from a business is the convenience, with which they can solve their problems. Initially a novel business concept generates a lot of excitement. With time , competition catches up and the businesses start to appear similar. Often the original business is decimated when powerful competitor emerge.

Businesses under threat often respond by cutting prices. That may keep them a little longer in the race but not for very long. Price cuts hurt margins, reduce quality of service levels and decrease employee morale indirectly. If a regular customer views a business engaging in a price war, she would be flummoxed.

Why?

Regular customers who are loyal to a business are not only because of the price factor. True, price pays an important role when a business is attracting new customers. But once the business shows its value to the customers, they are likely to stay longer and often buy more . They are willing to pay more money for higher value. Sudden price cuts may surprise customers and make them wonder if anything is missing. They might be inclined to think that by attracting more customers, the business is diluting its image.

On the other side a business may not be interested in adapting to new threats and models. The customer would again be surprised if the business is not adding any value. They will look for businesses that offer higher value and are adaptable.

Responding to competitive threats often require innovative solutions, which adds value to your business offering.

Believe me, your customers are really not going anywhere unless you are being lazy, careless or dishonest with them. If you are offering them good value, they might not even look at your competitors.

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