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For almost as long as I’ve been blogging, one huge message I’ve tried to impart is that you do NOT want to get caught competing strictly on price. You can read those old musings here if you need convincing of what a disastrous, slippery slope that can turn out to be.

Otherwise, here’s a nice little quote from Persuasive Brands that gives the pros and cons:

Competing on price can also be an effective way to gain market share particularly if your competitors have high cost structures or you believe they will be slow to recognize your actions or react to your more aggressive prices. Note that there are also ways to mask your lower prices through one-time discounts, coupons, promotions, etc competing on price alone leads to disloyal customers, low margins and many sleepless nights for business managers. Price competition can work. But once you start leading with price, you better be prepared to be the lowest cost producer and offer the lowest prices in the market – bar none.” – http://www.persuasivebrands.com/Topics_Competing_On_Price.aspx

 

Nicely said, though I still like the way Jack Trout put it:

Every one of your competitors has access to a pencil. And with it, each of them can mark down prices any time it wants to. And there goes your advantage.” – Jack Trout, Repositioning

 

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