‘Blue waters’ is the term that businesses give to completely new, untapped markets that didn’t exist only a few years before. In other words, when Apple released their iPad, they were expanding into new ‘blue waters’ because that was an industry that hadn’t really existed before their device exploded onto the scene. Conversely ‘red waters’ is the term used to describe areas where there is a lot of competition. Eventually all blue waters turn into red waters, and that’s then when companies start looking for fresh ideas.
Unfortunately most of us will not be lucky enough to release an entirely new product category that takes the world by storm. Leave that to the Apples and the Googles of the world. Instead then, most of us will be competing with at least a few others in our chosen industry. The question is, how do you stand out and present customers with the best option?
Beware of Underpricing!
One option is to underprice the competition and to offer the best value-for-money option out of anyone on the scene. Of course this can be a great strategy as people will always choose the cheaper option when presented with two equal products (well not always… as we’ll see in a moment). However the problem then comes when your competition also cuts their price… and then you do likewise. This can potentially continue indefinitely, and ultimately you’ll find that you’ve both priced each other out of the game, essentially ruining that whole product category. Customers won’t start paying more once they’ve become accustomed to a low price, so you can never get those margins back. Proceed with caution!
And in fact, sometimes it can work to offer your product for more. Why? Because people will assume that yours is the superior option. If you mark up your offering and make it the ‘premium option’, then people may flock to your more expensive product who want to say they have the ‘very best’.
Incentives
Another alternative to underpricing is simply to offer more value. What’s the difference? Well instead of bringing your price down to try and force out the competition, instead you keep the price as it is but add something else to the package. That could be a physical product, or it could be some other points rewards.
Lose to Win Guarantee
A lose to win guarantee is a guarantee that’s better than 100% money back. People now expect to get their money back if they don’t like a purchase, so guarantees alone have lost their power. If however you offer something that’s better than 100% money back – for instance 110% back, or 100% and your choice of t-shirt, then you will stand out from the crowd. It sounds risky, but most people won’t use this guarantee even though it attracts them to the purchase.
Increase Your Authority
Whenever someone buys your product there are trusting in you that it will do what it says. If you can make yourself more trustworthy than the opposition, then that will give you a huge advantage. You can do this by claiming more accreditation, by using more testimonials, or by showing awards you’ve won.
Featured images:
- License: Creative Commons image source
License: Creative Commons image source
License: Creative Commons image source- License: Royalty Free or iStock source: http://openclipart.org/image/300px/svg_to_png/184848/sale_tags.png
Today’s contributor, Craig Richards, is a freelance blogger, currently working with BreakAway Loyalty, a firm specializing in travel rewards. Craig is passionate about wine and is currently training to become a sommelier.
