If you spend any time looking at economics you will come across the concept of price makers and price takers. This is all good stuff in theory but in practice competing on price is a very dangerous thing to do. So, how to effectively avoid competing on price.
Economics identifies two types of business when it comes to price. They are price makers and price takers. In economics price takers have to take the price set by the market and price makers are able to set the market price. The problem with these concepts is that it assumes that price makers (which is what you want to be) are rare, if not impossible as you need a pure monopoly in order to be able to set the market price. If you are a price taker then you have a problem. If competition in your market decides that prices are going up or down you have to follow. This can often lead to a race to the bottom, which is a race nobody wins.
Monopolies are seen by economists and government as generally bad things as they restrict competition in the market place but this ignores one vital fact.
Every company and every person is, in fact, a monopoly.
There are lots of people who produce baked beans but Heinz has the monopoly on Heinz Baked Beans. There are lots of people and consultancies giving improvement advice but I have the monopoly on Christopher Wells & Associates Ltd. If you are going for a job there may be thousands of people who do what you do but only you have the monopoly on you. The trick is to make the fact that you have a monopoly in a certain area important to your customer or client and the way you do that is to be remarkable. This is something we have already discussed in a previous blog Why Being Remarkable Is Effective and also How To Effectively Stand Out In A Crowded Marketplace
Remember, remarkable means that you do something that is worth remarking upon.
You are a monopoly and therefore you can make yourself or your business into a price maker, but only if the customer sees you as a monopoly. If you are the same as everyone else then the only way to chose is on price. Make yourself remarkable and different and you have solved the problem of how to effectively avoid competing on price.
Some are fortunate to be in a market where they can make their product remarkable, Ferrari in the car market, Apple in the computer market, Rolex in the watch market and in your own way you may be able to make your product remarkable. Many of you know that we have a small honey business. How do we make our product remarkable among everything else on the shelf? Answer, we mostly produce honey in the comb from single variety flowers that are grown especially for us. That makes us remarkable. For many it will be some form of service. Hopefully the fact that this blog goes out three times a week and the emphasis on effectiveness makes this consultancy remarkable (you judge).
What will you start doing today that will make you or your business remarkable and turn around from being a price taker to being a price maker? Achieve that and you can compete on effective grounds rather than just price.
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