When your competitor decides to start a price war to drive you out of business, do this.

How To Win The Price War Without Even Touching Your Prices.

A client came to me some time back crying foul. Her neighbor had decided to start importing and selling the very products she is selling. When this neighbour of hers came into the market he reduced the prices of his products to be able to have a price competitive edge against her and surely this worked for abit. Some of her clients started moving over to her neighbor's surely attracted by the small price differences. When she realised this she panicked and decided to reduce her prices too to be able to woo back the clients she had lost and avoid a massive treck of clients from her business to her neighbor's and now direct competitor. They kept fighting these price wars of reduce I reduce until she reached the edge where any slight move further meant tipping over. She didn't know what to do because she felt she was being pushed out of business either way.

Am sure many of you have been in this position before or have seen people who are. Competition in business is real and it gets more fierce by the day. With many businesses in the market doing like for like business the fight to stand out and woo clients gets more and more heated by the day. In some instances it's gotten as nasty as nasty can get turning physical, verbal and even life threatening. So the question then becomes how can one compete favourably while remaining profitable because reducing prices surely has an impact on profitability. The further you reduce your prices the further your reduce your profit margins. Its always only a matter of time before you have no profits to post if the reduction keeps going on. This is surely a defeatist approach that will produce no winners in the end but only losers on all side of the engagement lines. I have seen this happen so much here but it always ends the same way, all competitors do is drive themselves out of business as they go at each other full throttle with the desire to push the other off the edge.

So what would be the best way to counter a competitor whose only weapon is price. How does one then get to fight and win the price wars without actually tampering with their pricing regime and profitability. If your USP as a business is price then you should be worried for your long term future. One thing I know about clients is they will always try to get whatever they want as cheap as they can and won't mind even getting it free if they can. Rarely will a client think, by the way am affecting this person's profitability hence threatening their business's sustainability. When you close shop they will gladly move on to the next one with less thought and ease. That said, make sure your pricing is not only comfortable for your clients but also your business and you too. Research has shown over time that customers will choose customer experience over price and other factors that determine the decision to consume when choosing where to buy from and for that matter its only prudent to make sure your USP is your customer experience. No matter how cheap you are, if clients are not happy with the experience you offer them they wont buy from you. So instead of fighting price wars focus of improving your customer/user experience as your competitors focus on reducing prices a thing that's not sustainable long term by the way. Right from the moment the client gets to hear about your business, to the time they get to walk in,walk out and use your products make sure the experience is top of the chain. When you do this trust me you will have created a loyal customer who won't be swayed by slight differences in prices and even if they did you will have the last laugh when they walk right back into your stores after a horrible experience out there.

It's important to understand that in sales user experience is king and second to none. When your competitor focuses on reducing prices to out compete you work on your customer experience to fight back. No one ever wins a sword fight using a kitchen knife so don't worry when your competitor gets a kitchen knife (pricing) , Just pull out your sword (customer experience) and the fight will be done before it even commences. You should also focus on marketing to drive in more traffic (sales) into the business. When you have 100 clients and lose 1 it won't spell doom like if you lost 1 client when you have only 10 of only that 1. So market, market and market. I can't emphasize that any better.

Jaluum Herberts Luwizza is a writer, speaker and business consultant with YOUNG TREP East Africa's No. 1 Business Management and Consultancy firm that helps people start and grow profitable businesses.

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