Who do you think is the low-price leader in retailing?
Once, the quick answer would have been Wal-Mart. But here's a cautionary tale of what can happen when you compete on price: A new study from retail consulting firm WSL/Strategic Retail shows 86 percent of customers no longer believe Walmart has the lowest prices.
That's gotta smart, given how much time and money the retail behemoth has spent on pitching its "always low prices" slogan. It's also likely painful for Wal-Mart's vendors who've often strained to get their costs down to fit into Wal-Mart's super-low price narrative.
Where do customers think prices are cheaper? The Internet, as well as other discount retailers and grocery stores.
Given this changing perception, competing on price is even less attractive. So how can you avoid it? Here are seven tips from the Small Business Administration, as well as a few of my own:
1. Find new markets. If competition is stiff, consider whether a neighboring city -- or country -- might offer a better opportunity to sell at a higher price.
2. Benchmark. Find out where you stand on pricing compared to other companies in your industry. It's possible competitors have raised prices while you've stuck to the bottom rung.
3. Develop unique products. It's best to offer products and services that are unique to your company. The reason is, when competitors hold sales, you won't be similarly forced to cut prices becuase your offerings can't be price-compared.
4. Bundle your product with services. Take a look at how Jonathan Fields has bundled his new book, Uncertainty, with his consulting. No discounts here. Bet they're selling like hotcakes.
5. Repackage and upgrade. Fresh packaging might give you a chance to combine your products in new ways -- ways the competition hasn't thought of yet. Or update products to add new features.
6. Build your reputation. When you're known as the best in your industry, price isn't a problem. Clients expect to pay you a premium. Get video testimonials, or at least ones where you can use customers' pictures next to their endorsement -- they're highly impactful in helping clients envision themselves using your product.
7. Create scarcity. If you've had a product or service on the market a while and sales have slumped, put out the word your offering will end soon. This works particularly well if you're about to introduce something new. Get a sales spike before you retire an older item. Or create scarcity by only offering a limited number of a particular item, promoting that only X number will be sold.
Do you compete on price, or sell on value? Leave a comment and tell us your strategy.