In this era of global competiveness price wars are increasingly becoming the Achilles heels of all business enterprises. While bigger organizations with well established brands are slightly better placed in confronting the price wars, small and medium enterprises with shoe string budgets tend to get greatly affected by the propping up of rival companies’ adamant at selling similar products as reduced prices in order to establish the market.
Price reduction may not necessarily be a bad thing. If the cost of doing business drops down to a substantial amount owing to various factors, small and medium business enterprises are better off passing on the recued price benefits to their clients. Small and medium business establishment are better off basing their business on bulk volumes and reducing prices may actually helping in procuring more business of better volumes compensating the recued price losses.
Recommended Tips to Tackle Price Wars: It is a very common occurrence for small and medium enterprises to feel the pinch when faced with a rival indulging in price wars to establish a broader market share. While price wars is eccentrically bad for all business establishments, here are some tips that can help SME’s to ride the high tide of price wars and retain customers without indulging in reducing prices to counter rival companies and startups.
Avoid the Price War Trap: It is intrinsically import for small and medium enterprises to avoid getting into price war traps set up rival companies and business establishments. If a rival company is indulging in price war to break customer strength of the SME, the company is better off adding some value to the product on offer rather than countering prices lower than the rival company. Remember price war can be a never ending prospect and may hamper the business generation as well as manufacturing and production costs. Price wars are best avoided at all times. Rather than focusing on price, making products centric to quality and differential services compared to rivals companies can be the clincher.
Add Value to Products on Offer: Adding value such as customer services coupled with the products or services on offer can go a long way in justified slight elevated costs compared to other companies offer lower costs. While clients buy the product only once depending on the product, it’s the services like customer satisfaction and after sales service that can make a big difference between buying a lower cost product compared to buying a genuine product couples with professional service mechanism.
Spread Awareness against Low Cost Products: Spreading awareness against the low costs products may sound as a negative business practice but is essentially a very useful tool in helping clients who are at the border line. A lower cost product may is not necessarily of a higher quality. A lot of clients focus on quality of the product with price being the second driving force between a lead and an eventual buy. Spreading awareness against the low cost product while offering comparisons of the quality and after sales service can allow for good sales without any price correction just to counter the rivals.
Focus On Customer Service Mechanism: SME’s can counter decreasing prices by focusing and improving customer service feedback mechanism. SME’s can use various tools including increasing the average age of the product compared to the rivals, offering free deliveries with the option of express ordering for regular customers are some tips that not only build a personal bond between the customer and the SME but also allows for hassle free and price war free business. The embedded value added services not only allow keeping the competition at bay but also justifies the quality and the sale of the product keeping customer’s interest paramount.
Exclusivity: Last but not the least, when faced with the dilemma of price wars, offering exclusive products can be the clincher. The SME can vouch for having alliances or strategic partnerships with other services like having insurance, multiple payment options including finance options for retail customers or even offering package of goods in a combo deal that may be exclusive to the SME and not offered by the rival organizations. SME sector sales may be driven by a monkey see monkey doo attitude but the ones that come up with exclusive original offers and thoughts are the ones that take the lead not only in their specific area of expertise but also in the hearts and minds of the customers’ and clients.