Bhagwan Krishna tells Arjun “Idam Shariram Kaunteyam” meaning that which dissipates is the body and therefore you must not think too much about it.As retailers we must understand this law.
What we sell is almost always for the body but we must remember that it is the mind that remains constant and governs the body so whatever we do must be targeted at the consumers mind.If you can convince the mind of a 16 year old about your value preposition you can get a customer lifetime value of millions of rupees if she shops with you till she dies.In the process of reduction of the 70 odd years the body consumes large amount of substances which the mind must fulfill.While it does that the mind is always careful and alert and tries to maximize the value in every deal it does and every transactions it takes part in.While the body wears the Jeans the comfort and fit appeal to the mind.While the tongue tastes the food the pleasure is entirely the mind’s.While the body works hard to earn the money ,the mind decides how and when it is to be spent and what is the “value” of a product or service.
By chasing the price a retailer commits nothing but harakiri.Have as look :
1.If you get your customers because of price you will loose them because of price as someone can always offer a lower price than yours
2.You have to pay something for anything so Price can not be a source of sustainable competitive advantage
3.You do not manufacture everything yourself so your competitors can always go to the same suppliers and may be crack a better deal or decide to work on lower margins assuming they got the same price
4.What is cheap for one is costly for another so you will always be “expensive” in the eyes of a group of customers.Just as we say how much is too much we can also say how low is too low.
5.Every pit has a bottom and one day you will hit it.
So what’s the solution ? Sell to the mind.
1.You are cheap,value or expensive depending on how your target customer perceives you.
2.You are what your customers think you are.It has nothing to do with the price on the bar code
3.Quality is in the head and not necessarily in the product.It is up to you how you drive “quality” and “price” in the mind of the consumer.Remember the game we used to play in school.You can always make a line look smaller by driving a bigger line next to it.Similarly you can always make a product look good Quality by by deliberately keeping a bad quality product next to it.
4.And if you can successfully do the price laddering and create value at each step you can compel the customer to do what you want her to do and at the same time make her feel that I made the right choice and ripped the retailer.
5.She loves it when she thinks she has made a fool out of you and this will make sure she keeps coming back.Get them in,sell them up and get them back.Got it ?
I am writing this post as I went to a big box retailer in Sholapur and while everything was done quite well they had completely thrown away the value which could have been captured so easily by doing a better Price laddering,branding and Private label strategy.
The power of category management is not is selling as low as possible but in selling as high as your customer can pay……..and feel happy about it.