A weekly look at Wyoming business questions from the Wyoming Small Business Development Center, part of WyomingEntrepreneur.Biz, a collection of business assistance programs at the University of Wyoming.
By guest columnist, Rodney Trahan, Streamline Enterprises owner
"Business has slowed and consumers seem to be doing more price shopping before they buy. In order to make a sale, at times I have had to beat the competition's price. How can I avoid losing money on a sale?" Bob, Casper
The first thing is to realize that by competing solely on price, you have relegated services to the status of a commodity. Let me explain by example.
While shopping for groceries with my wife, she asked me to grab a loaf of bread. I walk to the bread aisle and see a myriad of choices, but most loaves are priced within 15 cents of each other. I search until I find the store brand that is 65 cents cheaper than the next closest in price.
I don't know much about bread, but it generally all tastes the same to me. So, I grab the cheapest loaf knowing full well that perhaps half the loaf will be wasted. At that point I am mitigating cost for a commodity that I have no real appreciation for.
As I turn the corner out of the bread aisle, a promotional product catches my eye -- "Campers Bread." Loaves of bread inside lightweight cardboard boxes resembling a cracker box specially designed to keep the bread fresh and from being squished. I noticed that the price was more than double that of the other loaves, but I quickly realized the economic benefits if we can actually manage to eat an entire loaf.
The offer to refund 25 cents if I bring back the used box for recycling is icing on the cake. Better yet, I know I won't have to deal with the frustration of finding bad bread when I go to make a sandwich. I didn't mind paying the premium price because I understood that the benefit would outweigh the costs. The bread loaf was no longer a commodity in my mind.
Owners must define their business as a Unique Selling Proposition (USP). Why? Because knowing a USP means never having to compete on price.
What can a company do that stands above the rest and what is the company best at doing or providing? By the way, while great customer service is extremely important, it should not be on the list. That should already be a requirement.
Once you understand what USP is, define which types customers would appreciate and target promotional material toward them.
By the way, "Campers Bread" is a figment of my imagination.
Rod Trahan, Streamline Enterprises Inc., president is a licensed business coach. He can be contacted at (307) 461-4483 or on the Web at http://www.ActionCoach.com/rodtrahan.
A blog version of this article and an opportunity to post comments is available at http://www.wyomingentrepreneur.typepad.com/blog/.
The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question, call 1-800-348-5194, e-mail wsbdc@uwyo.edu or write 1000 E. University Ave., Dept. 3922, Laramie, WY 82071-3922.
Posted on Tuesday, September 01, 2009