March 4th 2010
Why Your Small Business Advertising is Being Slaughtered by Competing on Price
Advertising can make or break a business. While big corporations can afford to pay out a lot towards their advertising, small business advertising must be cost effective. Most small business heavily relies on marketing techniques to gain more customers.
Thanks to the current recession, small businesses have been suffering. Competition has increased and the resources are scarce. While big businesses have larger cash flows and hence a bigger safety net, it’s the small business that is usually forced to shut down. Many new small business owners drop their prices hoping to increase customer volume and grow their business. But only 5% of customers base their choices on pricing. So by dropping their prices small businesses end up dropping wages, marketing costs, and over all quality of their business. 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. Furthermore by cutting down on prices the small scale business cannot benefit the way big companies do, the reason simply being that a small business doesn’t deal in volumes great enough to reap the benefits of economies of scale like a bigger business.
If you’re cutting back on your small business advertising, then you’ll end up losing customers, because it’s effective advertising that attracts the price concerned customers. In order to ensure a steady profit a small business should focus on creating a specialty rather than cutting back on prices. This in turn calls for effective small business advertising. First off you have to show your creative niche, and prove that you offer more than your competition with offers like unique service, better customer support, error free order, etc. You can then begin to raise your prices, because the majority of your clientele will already be hooked by your claim to be above and beyond the competition. Small business advertising is hugely important towards gaining relationships with your customers. 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
Competing on price is a land best left untraveled. 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. To improve your consumer loyalty and keep them coming back, you should never throw out the value that you put into your small business advertising.