It seems that in a cut-throat competitive environment it would be nearly impossible for your business to stand out among lower-cost competitors, meaning doom is imminent if you don’t follow suit and lower your prices as well.
This is not exactly true. Lowering prices is not always the answer to luring customers in when the marketplace feels a little dry.
Whereas it might generate a bit of traffic, lower prices could lead to your business not meeting the bottom line which will definitely lead to doom. Besides, for every competitor who might opt to lower prices, there are two willing to go lower so there is no winning there.
It almost seems like there is someone who just gets a kick out of selling lower than his counterparts even if it means a loss. You have to wonder what sort of margins a competitor is working with or without because once the margin is gone everything is counterproductive.
Consumer behavior shows that most people have made up their mind on what they want to buy, having researched on the Internet. This means that when they come to you, they already know exactly what they want. It is also true that most consumers want appropriate value for what they are paying for.
This being the case, a small business can take the approach of adding value to its products. Giving your products a perception of increased value, whether real or perceived, helps to justify prices that might be higher than your competitors.
While others may compete on price, you may want to compete on service, so that your small business will stand out from the crowd because of your excellent delivery. This could mean neater packaging or giveaways (like sweets to kids of a family that is making a purchase). It also helps to have engaging service, where the cashier just doesn’t punch in the sale but takes the time to engage the customer in a natural way throughout the process. Another option is to provide a better warranty or return policy for the products you sell so that customers can place their trust in your business.
An out-of-the-box move, like adding a quality coffee machine for customers, might do wonders while they browse over electronics in your small outlet.
It is these little things that earn your outlet a reputation for providing a different shopping experience, effectively dwarfing your competitors and keeping your customers coming back to you.
Lowering prices is but a palliative measure that does not translate to good sustainable business contrary to what most business owners might think.