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Handling new business threats from competitors.
We are seeing our competitors importing product, stating that it is as good as ours(we know it is not as good as, we had them tested) and selling it cheaper than ours. As more companies have become cost concious this creats a big challange for our sales force.
How do you handle this?
Mike, this is a standard consumer problem. How do you deal with competing messages, and competitive under-pricing. I am giving you (and others) a link to my work on cognitive economics.
First the link: https://www.dropbox.com/sh/ocq9hwzzxb5vjp5/AAD1CnwN2SxNgMQCxmdsW9k0a?dl=0
There are lots of articles on establishing interest in the features of a product, and the fair price.
Here is how i would approach is:
- Identify different general aspects of your product and your competitor product.... say five different aspects of the products
- One of these five aspects is price, including the price you offer your product, and they offer their product, and two other prices
- Another of these five aspects is brand name, including yours, the brand name of your competitor, and two other brand names
- A third of these five aspects if the claims, including your claim, your competitor's claim, and two alternative claims
- The four and fifth aspects should be chosen in the same way ... general aspect (e.g., benefit emotion), including what your brand says, and what your comeptitor brand says, and two alternatives
- Mix and match these different specifics (not aspects, but rather specifics within aspects), creating combinations according to an experimental design
- In my system, each person gets different combinations
- The respondent rates interest, and second, how well does it apply to your brand vs competitor brand
- You now have the opportunity to discover something better at a higher price.
I'm at firstname.lastname@example.org if you want to chat about it.
Selling requires your sales team to build value. Where there is no value there will be no investment. The Sales professional must develop and build a value chain. Bottom line is the customer must realize you get what you pay for. Customers will pay more where they perceive a value.
Brand development will also lead to being able to command a premium price because the customer will realize that with the price comes value.
I'm writing this assuming that your sales force isn't struggling to get in front of potential buyers. If they are struggling to even get in the door at this point, what I'm about to write below will require some spend to get in front of those eyes and ears to get the doors open, but doesn't change my first blush pass at strategy..
Have you published the tests? Are they wow moments (e.g., product failures, mistated claims, etc)? If so, I'd highly suggest trying to be aggressive with those claims. We've found single line claims followed by video to be highly effective in substantiating those easy to remember claims. From that point, or even if they're not "wow" moments, simply quantifying the impact for a potential buyer is a huge opportunity. Most companies are cost conscious, but most buyers don't want to lose their jobs as a result of a purchase of equipment that has a likely failure.
Basically, hand your buyer the rationale for purchase and risks of avoidance and it should empower them.
Mike, can the issue with your competitor's clamps be quantified? If they are inferior to yours, will they fail in operation and, if so, at what rate? What is the cost or human injury impact in the final analysis?
If their product is so inferior, the problem is self-correcting and only temporary as they will have no repeat or referral business and might be looking at a lawsuit.
If, however, their product is of lower quality or just cheaper but in a way that does not impact the intended function, maybe the problem is your product being over-engineered or you are operating under an inefficient cost structure.
Serious purchasers may require test reports by accredited labs if the product has potential for injury or poor quality could lower the useful product life. Even if they don't ask for it, I would offer test reports by reputable labs as a part of the sales pitch and advise the customer to ask the same from other bidders. If facts are true, there is no need to knock the other guy down. He'll do it all by himself.
On the other side of the issue, a business can get a lot of mileage out of longtime customer relationships, but that's an invitation for someone to come in and eat our lunch if we get too complacent.
I would handle it by looking at both sides of the coin, but with the special focus on my own operation.
Given you have tested the competitive product versus your own, I would quantify that assessment into concise facts and present these to your customers to justify the premium cost. If the retailer believes the customer will not pay for this premium, then you know the key criteria for the buying decision. Ultimately, the consumer will decide if it is a good product when they sample/use it. Inferior products will not stand the test of the consumer and the repeat purchase will not happen. This is the current state of selling a private brand versus a branded product. Retailers constantly want their own brand benchmarked versus the leading branded product to close the gap of quality with the consume (or eliminate) for a lower cost. The same holds true for cheaper sourced product claiming benefits that are not proven or quantified. Use your testing to show the retailer and ask them for the same from the competitor. Remember FACTS ARE FRIENDLY BUT EFFECTIVE.
Holistic Management is a framework for decision-making and planning that enables you to combine economic, social and ecological benefits in every decision and plan.
Here is a brief article about it.
I am an educator of Holistic Management and here is our website:
Although Holistic Management was originally developed for farmers, it works for any type of business to gain alignment through every level of the organisation. The holistic financial planning module would be terrific for you to move you closer to your economic, social and ecological objectives.
I'd be happy to speak with you if you'd like further information.
Tel: +44 (0)7446 780081