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What's the cost of focusing on price?

What's the cost of focusing on price?

What's the cost of focusing on price?In a memorable episode of I Love Lucy, the Ricardoes and the Mertzes run competing diners next to each other. The competition is very spirited! In this clip from the show, a price war ensues with the price of a hamburger dropping from 15 cents down to a penny. When Ethel beats Lucy to the lower price, she thinks that she "wins." Lucy then gives a man a dollar and he orders 100 hamburgers. Obviously, the show is a comedy, but it illustrates that winning the lowest-price-in-town game doesn't mean you win.

In tough economic times, the pressure to lower prices is very real. Given the number of outlets that now carry natural and organic products, retailers need to be aware of the prices of key products in marketing that is going to their shoppers.

Discounts by themselves are not the answer. No store is better known for discounts than Walmart. In a recent survey of Walmart shoppers by ClickIQ, 88 percent of them wanted the megachain to offer more coupons in addition to its everyday low prices. Whoa! They want discounts on top of discounts. Walmart, perhaps, can meet that need with its size and purchasing power. But does your store have the strength to do that?

There will always be customers who only shop price. You can't make those customers your primary focus. Your cost of doing business is more than most other retailers': your store is smaller, your purchasing volume is lower, your staffing standards are higher, the products that you carry are made in smaller batches. You cannot build your business on those looking of the lowest cost.

Service is the area where we can compete and win by helping shoppers, offering practical advice and tips when they are shopping; providing a friendly, well-staffed and stocked store for them to peruse and enjoy; supplying practical health information with nutritious and delicious recipes; and so on.

Let's go back to the Lucy clip for a minute. How would things have turned out if the discussion focused on adding value—table service, a nice appetizer, a healthy salad, a mouth-watering dessert, a gluten-free menu, vegetarian options, etc.? I don't know whether Lucy or Ethel would have been better equipped to offer a nicer meal, but whoever earned that business would not have regretted doing so.

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