Why Competing on Price is Killing Your Small Business Advertising

Saturday, November 17, 2012

As a result of the current recession, small businesses have suffered a lot. There's an ever growing amount of competition, and a shrinking amount of resources. Without backup plans and the funds to undertake those plans like big businesses have, small businesses are closing their doors for good. A lot of novice entrepreneurs try lowering their prices thinking that it will increase the number of customers coming in. But only 5% of customers base their choices on pricing. So in lowering their prices a small business inevitably cuts back costs in the form of lesser wages, cutting down on marketing costs and often compromising on quality as a result. Customers that make up the other 95% base their decisions on quality, service, and advertising, but they're ignored by a business that only focuses on price. Because small businesses usually don't handle the vast amount of customer flow that large corporations do, they can't benefit from a price drop in the same way.

Also keep in mind that effective advertising is what gets price based shoppers to your store, so by reducing what you put into your small business advertising, you end up losing customers. To ensure steady profit a small business needs to show that it's a specialty, and not just show that it can lower prices. In other words it needs effective small business advertising. First you need to stand out from your competition. Better customer support, unique services, error free orders, etc. are just a few ways to show off your business' special niche. You can actually demand better prices for your company, and still attract more and more customers because your unique advertising should have told them that you're company dares to be different. Your small business advertising plays probably the biggest role in gaining your customer's trust and loyalty. It should be able to tell them why you're the ideal choice towards their needs, and should focus on your company's unique and special service

Small retailers are on shaky ground when they compete on price. There can only be one price leader, and this position is usually taken by large chain stores that operate on wholesale rates like Wal-Mart. You can never beat such chains at price, so instead of cutting down on prices and compromising your product's value, you should instead focus on building brand loyalty rather than price loyalty. Small business advertising should never sacrifice pricing, because in the end it's the value you put into your advertising that builds consumer loyalty and keeps them coming back.