I just read what I believe is a very dangerous, and potentially damaging, editorial, issued by one of my B2B electronics assembly brethren (an equipment manufacturer, not a materials supplier). It should be noted that the author (who will remain nameless) is the CEO, and not a Marcom professional. Perhaps he bypassed expert advice when directing his thoughts to the mass media.
The gist of what was said in these scant 233 words is best depicted by sharing two key sentences:
"There are too many suppliers in the field."
"The biggest pressure is excerpted on machine prices and margin."
After seeing this editorial in our mainstream industry press I reviewed my education, training, and experience, and made these conclusions:
1) NEVER issue statements like this. By telling the market that there are too many suppliers, that competition is diving on price, it only ENCOURAGES:
* Competitors to fight using price
* Customers to play one supplier against the other on price
2) If all of this IS true (too many suppliers, price dives, etc.) the SMART competitor would be writing about delivering/buying VALUE, and other points of differentiation that the weaker competitors can't match. This would help remind or educate the target buyers (those that value/need more than a low price) that at least SOME companies are delivering utility BEYOND cheapness.
3) Making price THE story makes price THE story. (thus the image that accompanies this posting. By reversing the words, we get a melodramatic phrase: "THE POWER OF PRICE", a phrase that aptly depicts just how serious I feel this mistake is.)
In essence, only the savvy low-cost producer (and there is only ever ONE of those) can ever win a price war. That arena ia almost NEVER the place to steer things.
Focusing on YOUR key points of DIFFERENTIATION is the only way to help your customer choose you.
Please let me know your opinions on this topic.
