DIFFERENTIATE OR DIE

Your salesperson comes back from a presentation. Did we win the business you ask? No…..is the reply…..the prospect said our price is too high!! What is he really saying?

He doesn’t understand that your product or service is any better than your competitors….either REAL or PERCEIVED. Therefore he wants a lower price. Price is always a factor but it has been shown a number of times not to be the most important factor…..unless your prospect does not see a difference between you and competition.

We are too often led down the path that price is the only thing that matters. This is not a sustainable difference unless you are going to follow a strategy of being the low price leader…..not easy to be. This is the Walmart or Southwest Airlines strategy.

Let’s go back a number of years and think about the coffee business in this country. This is a multi-billion dollar industry and at retail, the leading brands were Maxwell House and Folgers. Products owned by General Foods and Proctor & Gamble (not exactly small or unsophisticated firms.) A container would sell for maybe $2.99 per lb and each of the brands would battle for the better sales any given week or month. Any research conducted would not have shown a consumer problem or unmet need with your favorite brand of coffee.

So explain to me, how, a few years later we find a brand called Starbucks selling for $12.99 per lb and expanding their retail shops across the U.S. If price was the number one factor, Starbucks would have failed. They did not compete the same way…..in fact started out in their own retail stores…..selling more the experience and another place to relax vs selling just a BETTER cup of coffee. Once established, then and only then did Starbucks offer their package at retail, at a substantial premium to Maxwell House or Folgers. And created a new category of gourmet coffee. An opportunity… not fixing a problem that openly existed.

So next time you hear that your price is too high…..maybe you really need to work on how to DIFFERENTIATE your products or create a different user experience!!