Monday 09 December, 2013
What do people want when they shop? Common knowledge would say that they want the lowest prices possible. That’s the logic behind Wal-Mart and other big boxes. But if a retailer offers low prices, is it always going to win over its competitors?
Actually, low prices aren’t everything. Pricing your products too low could actually hurt your online store rather than help it. Depending on your market and its preferences, there could be other things that are much more important.
Does your product solve your target market’s problems? If it does, your customers will be more than willing to pay good money for it. If another product on the market solves your customers’ problems better than yours even though yours has a lower price tag, you’ll still lose sales to that competitor.
Today, with the race to the bottom that we’ve created with low prices and cheap junk made overseas, many people are choosing to buy with a social conscious rather than simply what’s cheapest. With news stories about overseas sweatshops, employees on food stamps and the ugly things that go into fast food, consumers are increasingly willing to pay good money to buy from the ‘good guys.’
The New Tribalism
People will also pay a great deal more to buy from a company that they consider one of them. We call these ‘tribes’ in marketing speak. A tribe is a group of people united by common interests and values. For example, a punk rock fan would rather pay more and buy from a cool online record store than to pay less and buy from Amazon. People want to buy within their tribe.
A Good Shopping Experience
It’s been proven over and over again that people will pay more for convenience and good service. If an online store offers a smoother and more convenient buying experience, it will get more sales even if its prices are higher than those of competitors.
Cheap Is Not a USP
Sure, people like low prices. But low prices are not the foundation of a good business. If your unique selling proposition (USP) is that you offer it cheaper than anybody else, you’re standing on shaky ground. The reason is that if someone comes along and manages to offer the same goods cheaper, you’re finished.
Know Your Market
The key is to know your market and understand what’s important to them. Are they socially conscious? Do they expect good service? Are they tribal in their shopping habits? It’s important to know what your market cares about and not to assume, but to rely on hard data. For your online store, offer a shopping experience that’s perfect for them. Low prices are far from everything.