Are you busy playing the pricing game? Is your low price the main differentiator between you and your competitors?
Re-think this strategy. It’s more a route to business suicide than a strategy. Consumers facing a purchase decision go through a consistent process.
- Problem recognition
- Information Search
- Evaluation and Selection of Alternatives
- Decision Implementation
- Post-purchase Evaluation
OK. there are some purchases wherein a step or two are skipped. A low impact purchase like a hamburger is based many times on how hungry are you and where is the nearest place to eat.
While there are many studies and sources of information on the Consumer Information Processing Model shown above, our discussion is really based on where does price fall in the hierarchy of making a purchase decision?
If, for instance, you where contemplating the purchase of a new car, what are some of the things you’d consider from step three (as shown above)?
- Brand loyalty
- Dealer attitude
- Serviceability (does the intended purchase actually fill a need)
- Proximity (how far are you willing to drive to get it)
- Peer pressure (or peer review)
- Knowledgable Sales and Service staff
- Available inventory (do they have the make/ model/ color that you want)
If price was your ONLY consideration… you’re telling me that NOTHING else matters? There are always additional considerations other than price. I’ve never seen a study where price ranked higher than third on the list of important considerations when someone is making something other than a low-impact purchase decision.
This decision making model can be applied to many different types of purchases. What are some of the considerations your clients look at when making the decision to do business with you? Become your own customer. Grab a sheet of paper and make a list. If you were buying your product or service from yourself – what elements would you consider in the Evaluation and Selection of Alternatives step?
Where did price fall on that list? If price is the main or worse – only – differentiator between you and your competition, then perhaps you should go sell hamburgers.