Welcome to the latest edition of our brand new weekly series, Break the Rules. Each week our plan is to highlight something you will have heard from some marketing expert as a best practice to be disobeyed at your peril. And we’ll tell you why it’s a rule you should break.
Last week’s rule was Don’t Mention Competitors.
This week’s rule = Lower Your Prices
Price is a major factor in any buying decision. And when your company is facing stiff competition, the pressure to lower prices to compete with or undercut those competitors can be high.
You’ll hear marketing experts and consultants telling you to make special offers, limited-time discounts, offer free shipping, or simply cut prices across the board to sell more at lower margins. And in the short term, that can be a great way to boost sales and take business away from your competitors.
But over the long term, lowering prices can be very dangerous. You can only lower your prices so much before you start losing money on each sale. And, if your competitor is smart and sells a similar product, they can simply match your lowest price. Then, when both prices are as low as they can go, and you’re barely breaking even, you have to figure out another reason why consumers would choose you over your competitors again.
Instead, what if you raise prices?
Scary, right? But think about it this way. When you’re competing against other companies that offer similar products or services, the important thing is to stand out. Be different. By being different, you can carve out your own place in the market that your competitors can’t compete as aggressively.
It’s not all about price. If it was, Apple wouldn’t sell any phones. Mercedes Benz wouldn’t sell any cars. And Harvard wouldn’t have anyone to teach.
So approach your competitive strategy from this new starting point – how can we offer more value? What can you do to change your product or service and add more to it? What can you build into a higher cost product that your competitors don’t have or can’t offer?
Instead of trying to be the low cost alternative, take pride in being the company that offers greater value. When you offer more, you can justify higher prices.
Have a “rule” you think we should write about? Share it with us in the comments below or post it to Twitter @zheller using #marketingrules