Coping with Price Shoppers
With inflation rising and home equity threatened by declining property values and limited credit availability, homeowners are shopping harder before buying. And, according to a Roper study on global consumer buying traits, Americans continue to be among the most price-conscious shoppers in the world.
The international consumer research firm claims that 73 percent of Americans are out to "drive a hard bargain"-9 percent higher than the global average. Thirty-seven percent are "deal makers;" most motivated by the search for "good deals." The other 36 percent are "price seekers," who are constantly on the lookout for sales that will get them products they like at a cheaper price.
Marketers are seeing the effects of such consumer tactics in the form of waiting for markdowns, dickering, and playing brands against each other. Part of the problem is Americans have been sold on the concept of "quality." For more than two decades, "quality" has been the mantra of American industry. The results are apparent all around us. Cars are more reliable. Computers are more reliable and far easier to use. Appliances don't break down as often as in the past. Because Americans can now take quality for granted, they are free to shop for price and perceived value. Brand loyalty is also threatened as more people assume there is no significant difference in quality between the brands.
More than half of Americans see no significant difference in the quality of automobiles made today. But cars are not alone in this "quality equality" dilemma. Across a broad range of products, says Roper, consumer quality ratings have been going up, while perceptions of brands has diminished.
WHAT PRICE VALUE?
While today's consumers take quality for granted and are resistant to paying premium prices, at the same time they don't want to compromise on value. Roper claims that two out of three shoppers feel strongly that value is very important. This suggests that price seeking and deal making are actually a pragmatic solution for getting the most for their money.
In the residential window and door industry, manufacturers, retailers and even traditional dealers can build value in a variety of ways. Product certification and a product warranty are two proven techniques to add value to even a "me too" product. Value-added features and benefits also serve to divert consumer focus to product performance difference, rather than mere price. Today's extremely competitive retail window marketplace includes brand-name products being sold to do-it-yourselfers for under $200. Steel entry doors can be had for under $300. What does this mean in terms of consumer expectations? How can traditional specialty dealers hope to compete? The professional replacement dealer must add value and customer reassurance beyond that available at retail. That means services and options that extend the value of the basic product, such as professional "guaranteed-right" installation or multiple decorative options. These are values strict retailers will find hard to duplicate.
Value-added selling is most difficult at point-of-sale in a retail environment. If all consumer questions and objections aren't immediately answered by information on the package or on in-store displays, the customer may walk. Many window replacement dealers, on the other hand, still sell in the home, and enjoy a captive audience. These dealers have an ideal environment to educate, answer all questions and even demonstrate products.
HOW TO SELL VALUE OVER PRICE
If you've heard it once, you've heard it 100 times: "Your price is too high." When the buyer tells you this, he or she is really trying to balance the value of your product against the price. In today's world, consumers often compare retail prices with yours. Don't let them.
Ask the customer how he or she measures price. Explain that cost is relative and that your price is actually lower then your competitors' when you consider the economics of professional installation and maintenance.
Explain that your (higher) price means that they get more. And mention that a lower price usually means that they get less. An inexpensive product will not guarantee all the benefits that you provide, and will often cost more in terms of complaints, displeasure and customer dissatisfaction.
Make them see the difference between the retail product price and your product service price. Remind them that value consists of the total benefits, and your solutions to the buyer's specific problems.
Emphasize the track record of your company and products, the fact that you have been specializing in installed products and services to the community for years. Remind them that most retail store personnel lack product knowledge depth and can't answer specific questions. Tell them that you believe in setting a fair price for your products and services. Provide a long list of satisfied customers and let them know that your current sales are at the prices you are quoting them.
Make sure they understand the basic issues of a quality installation. Your prospect won't buy if he or she doesn't completely understand the performance of your product and services. Don't get over-technical in your descriptions. Use every-day language, and periodically question the buyer to gauge his or her level of comprehension.
CLOSE ON VALUE
Review all the features, benefits and services that add up to a superior value. Ask for their agreement on the importance of each point. If possible, demonstrate the product before beginning your close. Ask them to agree that you have listened to them carefully and have successfully addressed their specific window and door needs.
Finally, work hard to maintain your established selling price. If you immediately falter and adjust your price, you will compromise your professional credibility and may unwittingly waste all your efforts to promote your value-added services.
Understand that today's window and door customers have more options, and are often aware of lower retail prices. Therefore they are likely either "price seekers" or "deal makers"-and will bargain instinctively. Window specialists need to handle increased price resistance with value-added marketing and selling strategies that stress professional services over product quality.