Increasing our prices in response to a price war

[ETrotter]

All

I sell wedding stationary on the internet and our main competitor has just reduced their prices significantly below ours. This is in response to us giving them a bit of a battering in the first few months of this year. I do not want to get into a price war and so am considering a more "adventurous" strategy to differentiate ourselves from them. I am considering the following

1.) Increase our basic prices so they are demonstrably higher than our competitors (around 25%).

2.) Make a big deal on our site about the quality of our invitations and warn customers about "cheaper imitations".

3.) Reduce the cost of our quickest delivery options (also a reduction relative to our competitor) to make our offering more attractive to those who need things in a hurry.

The idea here being to differentiate ourselves as offering "quality" rather than budget invitations - reinforced by the price differential and our marketing messages around quality.

Any thoughts on this?

Elaine

[peterjhale]

Hi Elaine and welcome

Are you actually seeing a reduction in sales since they introduced this reduction in pricing ?

[ETrotter]

Nothing has come through yet but the lead time on these things is probably a few months (they have only been operating this for around one month).

I was really seeing this as an opportunity to enhance our bottom line and taking our competitors relative weakness as a step forward for us. It is not at all clear to me that our customers are completely focused on price and speed of delivery is often a bit factor (at least a recent survey suggested this was at least as important as price).

Elaine

[fisicx]

I company I know has been told they lost a printing deal because they are too cheap. The prospective customer thought that the 'quality' of the printing would not be that good because they were so cheap.

If you are selling high quality bespoke wedding stationary then don't cut your prices, people expect to pay for quality so if you cut your prices then you will no longer be seen to be offering anything different to your competitors. I've just spoken to a good friend of mine who makes bespoke wedding stationary and she has told me that it is the exclusivity that brings her business which is why she can afford to charge the amouint she does.

[National Office Week]

I agree with not getting into a price war - no-one really benefits.

Stick to your 'high quality' USP and maybe have a few special offers to promote sales.

Kim

[wecando.biz]

Your approach sounds resonable, assuming that everything else about your operation (website especially) reinforces that perception of quality. If you do start to feel the pinch, how about throwing in additional stuff to make your value better, but keeping the price up? That way your sales won't drop, you rmargin may take a little knock by you are not pricing down the market.

IH

[AndysWeb]

It reminds me of the saying you get what you pay for.. high quality and cheap do not go hand in hand. May be have an entire campaign based upon a superior product ?