bargainingI subscribe to the Harvard Business Review Blog and an interesting article came through today that I wonder might have application to those of you who might be challenged by low price competitors.

It is a way to separate those who are truly price shoppers and those who are looking for value. It also might be a way to beat your competitors without compromising your own market position.

It turns out that truly price sensitive people will tolerate more uncertainty than those who are looking for value. Think Priceline. They only tell you the area you are bidding on and the star rating you choose. You bid and only when your bid is accepted do you know what hotel you get and exactly where it is. This approach allows hotels to sell unused rooms at a deep discount without compromising their relationship with those who are willing to pay full price.

So, let’s say you have a competitor that advertises direct cremation at $795. Your real goal should not be to capture the bottom of the market but to make it very difficult to for them to stay in business. So you beat his price at $495 but the customer doesn’t know when the body will be picked up or who will handle it. Your competitor¬†freaks out and lowers his price to $395 and accelerates his starvation. IF you get a call you go when you have time, you put the body in the cooler and cremate when you aren’t doing anything else and send them a postcard to pick up the remains in a plastic bag. YOU DO NOT PUT YOUR BRAND ON IT. At the end of the day you don’t care if you get any calls you just hope he closes shop quickly.

Read the Harvard Article here