It works for Wal-Mart, but it will kill your business

December 20, 2010 · 1 comment

 Sam Walton died rich, looking smart.

He was one of the richest men in the history of the world, and his success with Wal-Mart makes a discount pricing strategy look smart. While this strategy can work, it almost always fails.

Companies like Wal-Mart, Best Buy, and Home Depot are called “category killers.” Sometimes, months after Wal-Mart posts its grand opening banner, its competitors post theirs: “Going out of business.” This tempts many local companies to slash their prices to compete. It is a strategy that usually speeds their failure. As a locally owned business, you have to discover a way to make a difference in the lives of your customers.

What difference do you — or what you are selling — make?

Marketers often talk about the necessity of defining one’s “point of difference.” This language is significant. You must not merely answer what makes you different, but how what you do makes a difference for others. Ask yourself that question. Write down the answer. Show it to three or four people whose opinion you value. Demand that they be ruthlessly tough with their answers. Ask and answer: What is the difference you, or what you are selling, make?

That is a strategy for success. Having the lowest price is a strategy for failure.

Wal-Mart deserves the success; the company is truly rare. But for every Wal-Mart that succeeds there are a hundred local businesses that will fail because they choose to provide the lowest price.

One lives. One hundred die.

And the low-priced providers usually die first.

The low price position kills.

{ 1 comment… read it below or add one }

Roger Jackson December 20, 2010 at 12:28 pm

Thanks Mike,

So true, I am seeing it happen in my market and half the printers are gone now. Pie is smaller but we get a bigger piece. Sales about status quo, margins shrinking a little and difficult to sell value unless online printers screw up. They do screw up and then we get our price. Thankyou Kinkos and Office Depot / Office Max for not knowing how to handle files or customers “real” needs.

Happy Holidays!!

Roger L. Jackson
Artigy Printing Company

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