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Price Competition vs. Nonprice Competition

Discussion in 'General Entrepreneur Discussion' started by Yankees338, Nov 26, 2007.

  1. Yankees338
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    Yankees338 Bronze Contributor

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    I'm in the process of starting up a little eCommerce site with my cousin selling a product. We've already come up with a few little ideas to set us apart from the other competitors who sell the same product; one of them is an autoship feature.

    Are customers more interested in paying more for a product that offers better customer service and an overall better shopping experience than just finding the best deal? The product will sell for about $30, so the difference between the competitors won't be any more than $5-8.

    If we offer things like free shipping, it will be reflected in the price, but it may end up costing the same as the competitors. For instance, Store A charges $30 plus $4 or $5 for shipping. Store B charges $35 with free shipping. In the end, the prices are basically the same. If we're Store B, I was thinking that being able to advertise "Free Shipping" is a good marketing tool in being able to try to portray that we're offering the best deal.

    Additionally, being able to go with an autoship type feature would emphasize convenience and our desire to please our customers. This makes benefits both the business and the customers, but would most customers appreciate this offering or ignore it and shop for the best price?

    These questions all, essentially, boil down to what do customers want? Are most customers just looking for the best deal (financially), or will most pay a few extra bucks for a better experience?

    Thanks in advance for any responses or ideas you may have.
     
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  2. SnyCorp
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    SnyCorp New Contributor

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    With is this product, who is your target buyer?
    Teens, Young Adults, The Over 40 Crowd.....
    You'll find that the younger the age group, the more price will come in too play. They typically want the most BANG for their buck.
    This is just my 2 cents..........Is there anymore detail on the product you can give without giving away you Biz?

    Adam
     
    Last edited: Nov 26, 2007
  3. Yankees338
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    Yankees338 Bronze Contributor

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    Thanks for your input, Adam. The product is a type of cosmetic product aimed at both males and females. It's a special type of soap that can help just about everybody. It helps with acne, anti-aging, removing makeup, etc...

    The fact that it helps with acne could appeal to the teenage crowd, while the anti-aging appeals to the 30-50 year-old crowd (mainly women).

    It will probably be targeted for specific groups; lots of women and people from 15-50 could use it. Thanks again for your input.
     
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  4. SnyCorp
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    You have a couple ways you can market the product:
    1) You could market the acne crowd. With a product like yours you have a large group of clients that have tried 2-10 products in hope that it will rid them of acne. I really don't think price would be a huge issue for you, you have clients that are emotional about there problem and would do just about anything to solve it. I'd say you could see acne products ranging from $5-$500 of course some of those are drugs not soaps.

    2) Anti-Aging products are selling from $5-$300 the leader would be Olive Olay. The problem I see is you have a lot of clients that are " well it couldn't hurt to try" If they really have a something that gets to them I see them going the surgical route.

    All in all you have a nitch, and I would market it accordingly. I think that the acne crowd is the way to go, you'll have repeat buyers that are willing to wait 30-90 days for results. They will have a fair amount of time to judge for them selves if they like your product, and hopefully buy again.

    Have you tried giving some samples away? Seeing if you can get info in return. Pro's-Con's.

    You might think of siting down with 2-3 girls that work in Macy's make-up dept, picking there brains a little. It very well could be time well spent.

    Hope this info finds you well, Adam:thumbsup:
     
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  5. santiago
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    santiago Contributor

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    I assume this product is a commodity as you mention that there are several competitors selling the same product. I would think that most buyers are interested in a competitive price from a reputable company. My personal experience selling on the internet is people tend to be very sensitive to the price of the product. If your competitor is selling their product for 30 + 5 shipping and you sell yours at 35 and say free shipping - I'd guess more people would buy from the $30 seller - all other things being equal. Once people put the item in the basket and begin checkout they really aren't going to complain that much about shipping prices (unless it is outrageous). However; I could be wrong, with Black Monday a fair few retailers advertise free shipping.

    Differentiate yourself on services/reputation. Better customer service, faster shipping,etc. Get rated with BBB, etc and let people know that 3rd parties consider yourself reputable. Put genuine customer testimonials on your site. Send out a press release and get the press writing about you and then link to that article on your site (MSN said we were a top rated place to get these beauty products, yada yada yada).
     
  6. MBinMT
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    MBinMT New Contributor Read Millionaire Fastlane

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    I was just going to ask you also if you had a corner on selling this product, or is it being sold by anyone who can buy it wholesale? The difference is pricing power. With exclusive right to sell, you can offer something your competitors cannot. Otherwise you are locked into a price and advertising battle for your customers. If you have to compete with several other retailers offering the same thing, it helps if your selling site is easy to look at, easy to scroll thru purchase options and impeccable at giving your customer quick, clean transactions. It is SOOOO easy to lose customers online, you can't afford to give any up to 1 bad experience.
     
  7. Yankees338
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    Yankees338 Bronze Contributor

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    Thanks for the responses. All of them have some very valuable information. I'm trying to lock up a supply right now. My cousin/partner is trying to get back in contact with the guy who originally supplied him when he first started selling. If that indeed happens, there will be no turning back. I already paid for hosting and the domain (with Apto), so it's really just a matter of getting inventory now. Then, once the design is complete, we'll be up and running.
     
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  8. mishakrunic
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    mishakrunic PARKED

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    Hi,

    if you go for low price strategy, you might want to take a look at tools which can help you keep an eye on competitor's websites. Been using one of those myself for last 6 motnhs, and can already feel the difference (more than 40% turnover growth).

    Best regards
    Misha
     

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