CONQUER UNFAIR AND UNETHICAL PRICING

Pricing is the most powerful tool you have to grow your business.  No doubt!  But how do you respond when your competitors undercut you - unfairly and unethically?  Here is a situation unfolding as you read this edition, and six sure-fire ways to win in a difficult situation.

"Kosy Kitchens" has been a kitchen manufacturer and installer for many, many years.  The company prides itself on high quality workmanship, and excellent customer service.  Importantly, "Kosy Kitchens" always uses top grade materials, and provides high quality products and appliances.  They work hard to ensure that customer reaction will always be first rate.

Customers do appreciate it, like Ken Robinson.  He is knowledgeable, careful, and thorough.  He wants a "Kosy" kitchen, but can't understand why the "Kosy" price is $19,800, and several others have quoted  only $16,400 for the "same" thing. 

Sound familiar?

It is most unlikely that these other quotes do relate to exactly the same thing, but on the face of it, there appears to be no difference at all.  What is really disturbing, is that a thorough investigation reveals that the other installers will be breaching installation standards, using "rough and ready" installation procedures, and using materials that will only just do.  These other offers are a recipe for serious problems, and perhaps even loss of life further down the track.  Unfortunately, the standards are really
only guidelines, without legal standing.  This is a difficult situation, and here are six ways to win in spite of  it.
  1. Be Flexible!  The first response is usually to get indignant that anyone would take such damaging shortcuts.  You, dig in your toes on price.  Rarely a helpful attitude.  Much better to approach the situation as a genuine competitive threat - which it is!
  2. "Twin Pitch" on price!  Not everyone wants, or can afford, the top line solution you are offering.  More importantly, if you believe your offer is the highest value offer, you can also make a less expensive offer without resorting to damaging shortcuts.  You might need to seek  more information from the prospect.  Do you understand  "twin pitching"?  Actually, "Kosy Kitchens" had been "twin pitching" quite successfully, but when their major price competitor went broke, they stopped it.  New competitors have found an easy mark!
  3. Be unpredictable!  Most of the usual pricing approaches favoured by small and medium businesses are simple and predictable.  Just about any one in the business can guess your price for a specific job.  And they do.  Then undercut it

    There have been many "Management Memos" about various aspects of pricing, and you can use some very elegant solutions to this situation.
  4. "Show and Sell"!  In every case, people get wound up in "telling the customer what the differences are".  A picture is worth a thousand words - and it is so easy these days to get a picture to display the point you need to make.
  5. T.M.I!  Too Much Information.  By the time you have told your prospect all the stuff (you think) they "need to know", there's a good chance they are completely bamboozled.  The other people have made a much simpler offer - and it's likely to get the order!  You don't have to tell the customer everything - only what they need to make a decision at the  time.
  6. Top Sell!  In many cases, "Kosy" and others believe they offer a top product that "sells itself".  How did the others get a "leg-in"?  By "Kosy" using poor sales techniques.

    Actually, a top product deserves the best selling skills, and that is often hard to understand.  The Red Zebra "Master Selling" program identifies ten distinct phases to the selling interview, and they are all vitally important.  Improve the quality of your sales presentations.  Give your prospect a fair chance to see the benefits of buying from you.

    In this case, the lower priced alternatives are inherently unsafe, and may endanger life.  Here, there is a real compulsion to "tell it like it is", and lay in to the competition's dangerous approach.  Be careful!  At the very least,  you will sound carping,
     disgruntled and unpleasant.  It is unlikely that you will achieve the desired effect, and you may lay yourself open to legal action.  The standard approach involves using questions, rather than statements, and ensuring that no-one is identified in the sales presentation, either explicitly, or implicitly.  Good sales training will equip you for this situation.
Apply these six parts of the solution to this sticky scenario, and see your sales soar against unfair competition.

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- "MANAGEMENT MEMOS" ENDS -

Any advice, information or comment contained in this document is general in nature, and should not be relied on as the basis for any specific commercial, business, employment, or financial decision. Specific advice should always be obtained for each individual circumstance. Accordingly any advice, information or comment contained herein is for general guidance only.