How To Avoid the Price-Cutting War

We're in the middle of an interesting discussion between a client and a reader of his sales columns. (We interview and write the columns on behalf of this client, so we're definitely "in the middle.") In a column several months back, our client—a Southern California box manufacturer—explained his reasons for not lowering prices:

"I don't believe in lowering prices because there's always an inherent risk in taking on business that doesn't cover raw materials and turn a profit by itself. Most of us are job shops and are unable to predict business with pinpoint precision months in advance. We tend to think in terms of weeks. I never want to fill a plant with low-price business that short shrifts the jobs that actually make us money."

A reader responded with this argument:

"I see my competitors as all service-oriented. We can all pull off any miracle that our customers ask for. We are all slowly becoming technologically literate. In fact, the only factor that may outweigh pricing is the customer's relationship with the sales representative... and unfortunately this relationship is often built on the salesperson's ability to convince me to reduce the price! Those of us fortunate enough to show a profit do so because we have a few accounts that we can make a buck on while the rest barely cover the overhead."

The reader raises excellent points, ones that bring the discussion around to a marketing issue, not just a selling conundrum: If your competitors all offer basically the same services as you do, how do you distinguish your company as having more value?

Functional versus Emotional Benefits

The answer lies in the emotional benefits you offer customers. Think about how you, personally, purchase goods and services. Price is often down on the list of reasons. Print buyers are no different, as we've learned in our research. There are other, equally compelling reasons buyers purchase from you, which will counter any argument to reduce prices.

Let's take a look at how large companies promote their brands in a crowded market. In the auto industry, for example, BMW's "Ultimate Driving Machine" reinforces its prime target market's wish to be viewed as upwardly mobile and "cool." Saturn, on the other hand, plays to younger consumers who want to be "hip" and yet need to be value-conscious. Mercedes appeals to the "sophistication" of its primary market. Buyers like owning a Mercedes because of what the car says about them personally. Volvo promotes the "family values" of its primary market, who are mostly women. Safety and reliability are most important to Volvo owners, not price.

The insurance industry is also instructive. State Farm's "Like a Good Neighbor, State Farm is There" plays directly to the consumer's wish to do business with a company that acts like a helpful neighbor. Its homeowner and traditional farming customer base places great emotional value on believing State Farm will always help them out in an emergency. Prudential, on the other hand, promotes financial stability, which plays well with its primary business clientele.

Printers can learn from these examples. It's true any competitor can match the functional benefits you provide. Emotional benefits, however, are much harder to compete with. Rather than focusing on the standard functional reasons customers buy from you—price, service, quality, speed—you want to find out as much as you can about your buyers and their emotional reasons for selecting you.

Tapping Into Customer Feelings

Luckily, you don't have to conduct million-dollar research projects to determine how you fit into the competitive landscape and how you can differentiate your brand) based on emotional benefits. Owners of most companies that have been in business a while, like the above reader, have a core customer base that can be easily surveyed to discover these emotional benefits. A carefully crafted questionnaire will give you the information you need.

We learned, for example, that our above-mentioned box manufacturer was most beloved for his friendly manner and solutions-driven business ethic. Customers wanted honest, intelligent answers to their box and carton packaging questions. They also wanted to be seen by their supervisors as smart and resourceful. All our communications tapped into this customer benefit. We also knew the client's website would become a critical vehicle to express its friendly, solutions-driven message. It was designed with a very intuitive, user-friendly interface, and is scaleable to house an ever-expanding library of customer-specific information.

There are many other examples. One high-end printer client has agency and auto industry customers who choose it because they like feeling like their dealing with the "Mercedes" of printing companies. Another commercial printing client's customers choose it over lower-priced competitors because they want to be a part of its "Saturn-like" family. And despite price wars, a 200+ year-old direct mail printing client holds onto its marcom customer base by tapping into customers' need to feel secure they've chosen a company that both financially stable and technologically savvy.

Of course, you must deliver on these emotional benefits, as you do on your other promises. If Determine who your profitable clients are and the emotional reasons they like working with you. Even if these emotional benefits are tied to the relationship between buyer and sales rep, you can leverage the information into succinct brand messaging that transcends an individual relationship.

Charlotte Mills Seligman is president of Traversant Marketing Communications. The firm specializes in planning and executing integrated marketing programs for printing and allied graphic arts companies, with nearly two decades of expertise in the industry. Previous columns and issues of the company's Ti Monthly e-newsletter are posted on Inquiries should be directed to (415) 357-2929 or charlotte

© 2003 Charlotte Mills Seligman

April 10, 2003
Print & Graphics
Column #49, 4/10
Printing Journal
Column #49, 4/10
Avoid Lowering Prices
By Charlotte Mills Seligman

<Column Archives