The Lowest-Price Assumption

A common trap that we fall into when the economy is bad is assuming that a low price will guarantee a sale. That's called the lowest-price assumption. While a ridiculously high price will ensure no sale happens, we can't assume that a low price is all the customer is looking for.

Even in tough economies, people want high quality stuff. They don't want the cheapest, poorly made item. They still want the best, or at least something they consider high quality.

So if we make the lowest-price assumption, it means we feel the pressure to provide the best product at the lowest price, which of course means we lose either way: if they don't buy, we lose a sale, and if they do buy, we lose money.

It still comes down to relationships--do customers trust you, are they comfortable telling you what they want--do they want you to get into their businesses? If all of that is a yes, then the rest is easy--providing them with the product they want at a fair price.

If you don't do the above, there isn't a low enough price that will overcome it.

Barry LaBov
LaBov and Beyond
www.labov.com

Interesting learning regarding consumers in this economy

Our company conducted focus groups for a luxury manufacturer recently. We wanted to understand the effect that the economy has played in their customers' buying habits.

These were consumers that were used to spending hundreds of thousands of dollars on a product. We wondered, would they now buy a smaller product, a more cost efficient product?

The answer surprised me.

They all told us that the next time they bought that product, they wanted a bigger one, a more powerful one. No compromises.

A lesson for all of us. Yes the new economy stinks. Yes, there are people out of work. BUT, that has no bearing on the buying habits or expectations of the people we talked to. They want a great product. They expect tremendous service. And of course, they now expect a real good price.

This is not the time to compromise. The people that are buying (even though there are less of them) still expect a great product. Don't underestimate them.