Any war, including price, can only negatively affect people and business. According to statistics, a decrease in the retail price even by 1% leads to a drop in operating profit by as many as 12%.
What is the danger of price wars?
Many marketers mistakenly believe that discounts will help attract new customers. In fact, any discount destroys business and imperceptibly for the company itself draws it into a price war. As a result, financial results are worsening, because the purchase price or cost remain at the same level. And the discount can be formed only due to margin.
In addition, constant discounts create a false representation of the client that the company’s goods are completely in demand. Discounts, distract the attention of the consumer from product quality or service quality. Indeed, new customers will appear, but these are cheap hunters, and you can’t call them loyal consumers.
Over time, the buyer will begin to demand an even greater discount, and then again and again. All these factors lead to the fact that the company will be less and less to take care of the quality of the product itself, about maintenance. As a result, the company is drawn into the price war, which can shake even the most stable company.
No need to think that this concerns seasonal sales or bonus programs. It is dangerous when the company is sure that only discounts can increase sales.
How to leave the winner from the price war?
First of all, formulate and transfer to the paper a unique trading proposal of the company. If you do not find anything attractive except the low price, then most likely that the business is doomed to death.
Follow the quality of servicing your customers. Be sure to constantly improve quality, because the best customers are solvent people.
Think about what else you can offer the consumer, for example, additional free options. It can be free delivery or a headset to the phone and so on. The same delivery will not affect the size of the profit, especially since at any time you can refuse additional services.
Constantly looking for new sales markets. If in your city, all consumers are already covered, then go to a new level – look for customers using the Internet in other regions.
Develop a line of products different in cost. It is best to have at least three sentences, for quality lovers, for the average consumer and for the seeker cheapness. Thus, you will not have to dump, and new customers will appear.
And teach your staff to argue the refusal to reduce the price. Almost any client is ready to bargain – this is normal. But, the seller must focus on the quality of the product, its advantages, but not at the price.