Beware of pitfalls in lowest-price approachQuestion:
It seems that every day I open the doors of my clothing store, someone is having another sale with prices that I haven't been able to meet. I hope it does not signal the end of the small shop.
Each is trying to entice customers into their store. It seems to be coming from every business sector, and it's happening in spite of the fact that products and service quality are improving. How's that possible?
With almot zero inflation, producers can no longer justify price increases every year, which is probably what you'd call lean marketing. The customer is being educated to seek out a cheaper price. Nobody pays full retail anymore. It's common for the customer to ask "What's your best price?"
It's interesting that the high-end providers are holding firm, like Neiman Marcus, Tiffany's, Mercedes, and Nordstrom. The word "bargaining" is not in their lexicon. It's the high-end top service provider who proves the rule that you can still sell a product and still maintain the price.
When the customer ask for your price, they've already decided that they want your product; the real question is, How badly?
At that crucial moment, resist the urge to go low, to undersell the underbid. That's where the first mistake is often made. Now's the time to probe the buyer's needs and desire. Ironically, most buyers will tell you what's on their mind if you have the patience to ask and to listen.
The very first time a prospect asks you to name a price, it's always too early to respond. Dodge the question like you didn't hear them. Respond on the features and benefits of your offering. The time to respond is when it's been asked the second or third time.
Whe you do respond, always form your pricing response as a question, "The price is X dollars, is that within your budget? do you know what that includes?"
Remember: The client who waits until the end of your presentation to ask for a price is either a professsional or an amateur as a buyer. If they are a professional, be prepared to justify the price with serious value added rationale.
If they're an amateur, it will accompanied with buyer insecurity. Take time to explain the price, how it's determined and what it includes. It's a selling situation cloaked as an education process.
If someone else has met your price on a previous occassion, then your product is worth what you're asking, since they've confirmed it by buying at your price, However, if the price rejection is normal for your product, you may be pricing your commodity too high.
You may need to develop the fortitude to develop to reject certain deals. There is always a small group of buyers who won't be please and are willing to accept and inferior product.
Finally, remember that every product and service has multiple values. You need to locate those before you can sell it. Take time to audit the benefits and articulate them in the most compelling fashion. That's how Mercedes, Neiman Marcus and the successful ones do it.
Bill Bryan is a counselor with the Service Corps of Retired Executives. SCORE offers counseling, workshops and seminars on small business operations. You can reach Bryan through SCORE, 515 N Court St. 815-962-0122, for information and appointments.
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