Why Compete on Value Over Price

For quite some time no one seems to understand the difference between value and price. Every consumer has wants, desire, needs and expected satisfaction it looks forward to get in a product. Value is the amount of satisfaction a consumer gets from a product.

Closely related to value is price which is the amount a consumer is willing to pay for the value the product or commodity offers, price is negotiable and hence not static.

  • Compete on Value          

This involve offering a better quality product, a premium products which gives additional benefit or value to the consumers. Manufacturers who choose to compete on value should seek to communicate with consumers, offering to give pain free service. Competing on value require manufacturer or entrepreneur staying on top with an exploratory mind and technological innovation. It involves adding quick extra touches of creativity and keeping focus.

Competing on value should be done by putting the consumers first before the process and not vice versa

  • What do you stand to gain from majoring on value?

Having to be a pioneer manufacturer of a product in the market and having the new entrepreneurs offering the same product for a slashed price seems tempting and might make one do the same but with a lower value, however this is a suicide mission noticeable by the consumer. Sticking to ones high valued products increases the loyalty of consumers as well as keep the consumers loyalty.

Concentrating on a value offers the chance of offering the consumers a choice of time effectiveness, guidance and confidence in the integrity of the product. Competing on value is based on the integrity or reliability system

  • Any drawback associated with focusing on value?

Focusing on value has disadvantages also as it requires additional overhead cost, marketing and advertisement, it also requires staying on top in terms of creativity, innovation and lots more but this is time dependent.

Focusing on value requires continuous assurance to the consumers however some consumers cannot really be assured and their loyalty is time dependent.

  • But if you choose price….

Most consumers are price loyal and will go for products which offer them the product for a reduced price. Most consumers are price conscious and hence their loyalty can be easily bought.

Competing on a price gives you a leverage over others and those who offer the same products for higher prices.

The bottom line is every entrepreneur must seek to understand which strategy to use every time and when to switch, as each strategy has advantages and disadvantages. It is quite important to understand that strategy is subjective to time and the targeted population as well as geographical location and a host of other factors. Each entrepreneur is subjected to choice and not compelled to be tied to a particular concept.

It’s also pertinent to understand that the concept of value is fundamental while the concept of price is arbitrary. This concept must also be fully understood to know if a company is underpriced or overpriced and helps to choose the right price.