Noted American management guru Peter Drucker was well known for his axiom that “quality always costs less” and maintained that quality consciousness ensured a business`s success. Quality has far reaching consequences into the manner in which the company is promoted…..
It is a common misconception, especially among small businesses that if they undercut the competition and sell for less, then everyone else will be unable to compete, and will ending up placarding their business with the result that the price cutter will garner all the trade and then exert monopoly pricing. It just doesn`t work like that. My first mentor in the business world was a merchandise manager of a chain of stores coast to coast to coast in Canada. He was a wily old coyote and he recounted the story of a business in Winnipeg called The Man with the Axe. They sold for less, in the goal of winning the monopoly of low priced clothing and accessories. Apparently, customers would stand in line around the block to get into Mr. Axe`s store. Not long after, Mr. Axe closed up. There is a lesson there that the cheapest price does not guarantee a business that will serve its customers satisfactorily over the long term. Its not possible to have the lowest price on everything and its not viable to play “get the business” since a business acquired by the cheap is usually not sustainable.
So, there is always someone game to cut the price …There was a customer we had who was buying great guns for a while. They were selling on the web at prices cheaper than what they paid from us and selling individual bottles from the packaging. Every week there was some crazy offer in the e-mail of some pitch that was nonsensical, and usually at cost, slightly above it, or sometimes below it. The idea was to be the king, and it appeared, to put everyone out of business. Fortunately, we avoided getting burned on the payments side and this once swaggering client crashed and burned after the novelty of the act wore off.
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