Price shoppers, or deal hunters, seem to be most interested in the lowest price. Unlike value shoppers who are willing to pay more in favor of an increased sense of value, the deal hunter will only pay less and is willing to accept less.
In my early working days I worked at a retail store that advertised as a low cost provider. The prices were guaranteed to be low and we would beat competitor’s prices. Management’s thinking was that this was a great way to “steal” market share from our competitors. In retrospect I have to disagree. They didn’t buy long term market share, just the market share of that particular transaction.
Price shoppers are willing to work hard to find the lowest price. The result is that they tend to lack loyalty in favor of the lowest dollar amount: they are willing to switch from one provider to another as long as someone honors their wish for a lower price.
Don’t misunderstand what I’m saying: I’m not criticizing price shoppers, I’m criticizing low cost providers. Many low cost providers (including the one I worked for) advertised that they were the lowest price but ended up offering prices that were essentially competitive. The price shopper would call around and then call back, and sometimes even try to bargain the price down even further, which took up valuable employee time.
I no longer work as the low cost provider. I’m not interested in cutting margins razor-thin in order to gain a fickle buyer who is interested more in saving money today than in a long term, mutually beneficial relationship. If you are looking to start a business, seriously consider marketing to the value shopper – the one interested in a long term mutually beneficial relationship as the base for your business.
For those in business already, how can you best deal with the price shopper? Here are some suggestions:
- When creating coupons and promotions, make it clear that they cannot be combined. You don’t want to give a customer an amazing deal only to have them pull out the 50% off coupon after you’ve agreed on the deal.
- It’s okay to allow customers to ask for a lower price but don’t just give in to their request. Lower your offering as well so that they understand why your price is what it is. If you simply acquiesce to their price demand without reducing the value of your product, you’re telling them (even if it’s not true) that the price you just knocked off was additional profit that you didn’t need.
- Don’t let customers play the “I shop here all the time so I should get a deal” card. Assuming you’ve priced your products competitively you can assure them that they are getting a good deal from you. Show them the value of the purchase.
- Don’t let customers play the “If I buy this low-priced product today I’ll pay regular price on all future purchases.” This is a common claim, especially made to service providers, and yet it rarely happens.
- If you are going to be the “guaranteed low cost provider” then make your prices so obscenely low that price shoppers won’t waste your time by calling you, shopping around, then calling you back.
Price shoppers make up an important spending segment and could be a good customer base for you. Don’t let them take advantage of your business, though, because they could drive you out of business.