Should I dramatically lower my prices to beat the competition?

Dear Aunty B,

Mine is a very competitive e-commerce travel industry which, in this economic climate, is serving a travelling community that is 40% smaller than it was last year.

At the moment my prices are competitive… not by a lot, but still competitive. I’m considering dropping my prices dramatically lower than my competition in hopes of steering more buyers to me… but flip side risk is there are not enough buyers right now in the first place to “stimulate”, and then I’ll really be in a hole, making less per sale.

I’ll just be stuck holding less revenue than I am now! What should I do?

Paul,
Sydney

Hi Paul,

Poor thing. It’s a tough year, but remember it’s the tough that will survive! My advice is this; don’t lower your prices to try to create more traffic as the market will follow you down.

Instead you must try and compete on customer relationships, not price. This is where smaller companies can beat the big boys.

Here are three suggestions from SmartCompany’s futurist and genius marketer, Uncle B (Colin Benjamin).

1. Use some of the potential lost revenue to make a customer offer (or a discount on a partner travel deal).
2. Identify the section of the 60% that have above-average travel spends (not necessarily greater number of trips) and offer to meet their airport fees (make it easier for them to decide to travel).
3. Establish the characteristics of your most profitable remaining segments and then place a few ads in their media channels announcing (1) and (2) as a “We’re making it easier” campaign.

What else can you offer your customers? This is the question all entrepreneurs need to be asking themselves and their staff.

Good luck!

Your Aunty B.