Price dumping is often the first thing that comes to managers' minds when developing a competitive strategy. However, in order to increase your own market share, it is not necessary to reduce business profitability and prices; there are other effective measures.
If sales have started to fall, or the company is significantly lagging behind competitors in this indicator, it's time to find out the reasons and develop an effective strategy for positioning in the market.
To win the competition, the most important thing is to understand the needs of your customers
The first thing to do is to understand the key factors that influence consumer choice of a product. Thus, according to a study by The Forum Group, the high price of a product makes buyers refuse to buy only 15% of the time. The main reasons lie in the service offer - poor service (45%) and insufficient attention paid by managers to the client (20%). That is why on the market you can often find companies offering products at a reasonable price, while the sales of one of them are much higher than those of a competitor.
Thus, lower prices do not guarantee sales growth. It is not uncommon for a company to sell a similar product even more expensive (for example, hair shampoo or toothpaste) and, at the same time, more efficiently compared to competitors. This is due to the fact that she was able to competently identify the needs of customers and correctly position her product on the market.
Based on the analysis of consumers, draw conclusions how you can increase the value of the product for customers. Tell the consumer what additional benefits he will receive when purchasing a product. For example, by pointing out the special unique functionality of the product.
Identify your key competitive advantage and summarize it in a USP (Unique Selling Proposition). It should be the leitmotif of your marketing policy.
It is also important to understand what service factors matter to your customers. For example, you can sell cars for a higher price, but still offer a free set of additional options that your competitors do not have. Or increase the warranty period from one year to two.
Estimate the competitive position of the product
The assessment of the competitiveness of a product is also based on customer research.
The tasks of analyzing the competitiveness of a product are not only in assessing, but also in predicting the competitiveness of products, as well as studying the factors that affect it.
In order for a product to meet the needs of customers, it must meet certain parameters:
- technical (properties of the product, its scope and purpose);
- ergonomic and aesthetic;
- regulatory (compliance of the product with applicable norms and standards);
- economic (level of prices for goods, service).
Based on the analysis of competitiveness, it is necessary to develop measures to ensure the required level of product competitiveness. For example, change the packaging of a product or improve its usability.
Analyze the activities of competitors
The reasons for the ineffectiveness of sales in the most general form can be reduced to the low competitiveness of the product itself, or an insufficiently high level of service relative to other market participants. Therefore, after you have decided on the needs of buyers, it's time to analyze in detail the activities of your competitors:
- assess their strengths and weaknesses (market share, customer loyalty level, etc.);
- become their client and look at the work of the company from the inside.
Based on the analysis, determine your own market positions and weaknesses and try to be one step ahead of your competitors.
