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A new take on price wars
ItsAllBallBearings

5+ Year Member



 
Msg#: 3136405 posted 4:08 am on Oct 27, 2006 (gmt 0)

I have browsed through the previous threads here on price wars, but i think i have a new twist on it.

We have a very new product that is VERY much in demand. So much so that our Mfg cannot even keep up with us. This product was going to be our bread and butter this holiday season. In the past week, we have seen 2 new competitors pop up and each is taking the approach to lure us into a price war. Their ads blatantly target our business and our pricing.

No big deal, in the long run as their prices are not sustainable. However, they seem to be using it as a short term strategy to take away our holiday business. Their sites clearly mark the product as a "short time" sale so i know the prices will go back up after the holidays.

When something like this has happened in the past, i ususally just throw in a value-added service to the product, like free priority shipping, and problem solved. However, my options are limited this time around due to the issues our Mfg is having in getting us the product.

What do i do? Do i fall into the price war and watch a good portion of our expected holiday gains get taken away? Do i run ads targeting their business as "new" and "fly by night operations"?

i'm stumped, TIA

 

shri

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3136405 posted 5:05 am on Oct 27, 2006 (gmt 0)

>> Do i run ads targeting their business as "new" and
>> "fly by night operations"?

There might be legal issues that prevent you from doing it.

By ads, do you mean PPC or print and tv ads?

ispy



 
Msg#: 3136405 posted 6:03 am on Oct 27, 2006 (gmt 0)

The undercutting is sustainable, why? Because there will always be someone new there trying the same thing. The options are to stick to your prices and damn the torpedos, or spend your day watching your competitors prices and haggling with manipulative customers. I prefer the former even if it means losing sales.

ItsAllBallBearings

5+ Year Member



 
Msg#: 3136405 posted 6:10 am on Oct 27, 2006 (gmt 0)

been thinking about this some more and here's what ive come up with:

I'm pretty good at garnering repeat business from my customers. I'm willing to bet that not only am i better at this than these competitors, but i'm more willing to turn this into a battle of patience and long term strategy.

Combine that with the fact that this product is new and attracting a lot of attention, and i've got my plan (i think). I'll drop the price to basically cost+ad+shipping. I'll make my money when these custoemrs come back. If these guys want to lose money on this product, more power to them. But, i'd rather have the customer than a profitable sale now.

As for the "campaign" ads, strike that, it was just a gut reaction to being "attacked". You're right as it would border on libel (or is it slander, can never remember). Plus, i REALLY do not feel like dealing with those annoying "but he has a lower price" customers.

Raymond

10+ Year Member



 
Msg#: 3136405 posted 8:37 am on Oct 27, 2006 (gmt 0)

Price war hurts. But it sometimes hurts even more that if you don't participate in it. When you just sit there letting your competitors getting the sales, you are not just losing sales, you are losing loyalty from your clients. Personally I'd rather focus on working on getting a bigger client base with lesser profit than losing a chunk of your pie while making a little more on each sale.

Wlauzon

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3136405 posted 9:49 am on Oct 27, 2006 (gmt 0)

But it sometimes hurts even more that if you don't participate in it....

But not always.

About 4 years ago a competitor was bound and determined to undercut our price on a product. We happened to know that it was going to go into a very short suppply situation, so we let him go for it with no response.

A week later he was out, could not get any more for weeks. And we were selling them like crazy and making twice as much as he was.

He is no longer in business btw.

corbing

5+ Year Member



 
Msg#: 3136405 posted 4:43 pm on Oct 27, 2006 (gmt 0)

We have a very new product that is VERY much in demand. So much so that our Mfg cannot even keep up with us

If you have a product in HIGH demand and the LOW supply, then you should raise your price. Let the competitors do whatever they want. If they take away some of your business, oh well - you've stated that you are having difficulties filling the amount of business you are getting now. Enjoy higher profits on a volume that you can fulfill.

jsinger

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3136405 posted 5:35 pm on Oct 27, 2006 (gmt 0)

We had a product in huge demand. Then it became virtually unobtainable last year after Hurricane Katrina.

Still there were sites deep discounting it. (I figure 20% of our competitors are idiots)

We raised our price. We filled a few orders by buying stock from our deep discount competitors. One seemed unaware that products from New Orleans might be hard to get. LOL

Sometimes having a high price is the smart way to go, and it helps your customers who really need that product.

And don't mention "price gouging." Most of us aren't selling insulin. That's an economic concept invented by politicians.

axgrindr

5+ Year Member



 
Msg#: 3136405 posted 6:41 pm on Oct 27, 2006 (gmt 0)

(or is it slander, can never remember)

slander = oral (someone told lies about you to your co-workers)

libel = in print (someone posted lies about you on their website)

Wlauzon

WebmasterWorld Senior Member 10+ Year Member



 
Msg#: 3136405 posted 3:37 am on Oct 28, 2006 (gmt 0)

We filled a few orders by buying stock from our deep discount competitors..

Haha... we have done that a few times. Have not been able to lately because solar is so hyped up right now, but when it first started we were buying panels from our discount competitors that they had bought at the old price (about 20% less).

8foldpath

5+ Year Member



 
Msg#: 3136405 posted 7:26 pm on Oct 30, 2006 (gmt 0)

Nice thread.. I've appreciated hearing what everyone has to say about this.. I'm sure most of us have been on both sides of the fence.

Bewenched

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 3136405 posted 6:08 am on Nov 3, 2006 (gmt 0)

Maybe you should seriously stock up on the item so much so that your competitors orders cannot be filled. Then in your ad you can state "IN STOCK NOW"

If you have an item in hand and the customer knows it you will make the sale for high demand items even though someone else is cheaper. Just remember .. that competitor could be charging very high shipping rates or handling charges to make up the difference.

ItsAllBallBearings

5+ Year Member



 
Msg#: 3136405 posted 9:44 pm on Nov 3, 2006 (gmt 0)

bewenched - thats actually part of our solution. We have about 50% of all current available stock coming to us on Dec 7th. So, we'll at least have it for the big holiday rush if not the early shoppers. as far as the overal costs, they are offering free S&H, so we are SOL on that one.

We've also tuned up our ads to reflect our stability and history int he industry. Conv rates seem to be back up to normal...now if we can just figure out why google traffic sucks all of a sudden.

sigh...its always something isnt it ;)

ItsAllBallBearings

5+ Year Member



 
Msg#: 3136405 posted 11:15 pm on Nov 16, 2006 (gmt 0)

just thought i'd provide an update on this one....

our stock is starting to come in more regularly and we've been able to cut our lead time in half on most of this product. That combined with us cutting our price and refining our ads has given us a higher conversion rate than before! Granted, we're making less per order because of the lower margin, but we're getting the orders and customers, which is whats most important to us right now.

i cant wait until Dec 7th when we remove the lead time altogether and all those comparison shoppers flood our system.

Ledfish

10+ Year Member



 
Msg#: 3136405 posted 3:50 pm on Nov 18, 2006 (gmt 0)

Another Idea is to make it blantly clear that you provide a money back guarentee of some sort. If both you and your competitiors already do this, then is it possible to hype that you offer it.

Essentially, the goal is to make the customer consider your product and the value add that they would get by purchasing from you.

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