The Race To The Bottom

The most pernicious myth of marketing is that of the lowest price.

Marketing is an underappreciated skill. Tell a friend you’re working on your marketing, and everyone will have an opinion. Everyone “thinks” they know how to do it. In a way we would never say about programing a computer or opening up a chest for bypass surgery.

People “see” marketing everyday, and they copy what they see. Reality is slippery in that sense, because the best marketing doesn’t look like marketing. It doesn’t look like anything - it’s indistinguishable from regular life. Marketing that “looks” like marketing is what people are talking about, and that is what the average person is falling in lockstep with.

Enter the myth of the lowest price - businesses overuse the promise of the ‘lowest price’ not because it’s the best marketing positioning, but because they don’t really know they have any other options.

Competing on price has advantages and disadvantages.

On the one hand, if you’ve created some new process or rolled out a new bit of tech that lets you produce the same amount of good or service for less cost, than you can charge a lower price and still maintain good profit margins. If that’s your competitive advantage, then of course you deserve to corner the market.

But there are many businesses that cannot go that route.

Consider a one-person Personal Trainer business. There are ways for them to cut their costs, but beyond a point you simply will not be able to do that anymore. Slashing prices endlessly to be competitive in the market is what is sometimes called ‘The Race To The Bottom.’ Pushing to sell your service at the absolute rock-bottom prices is a competition where businesses can push each other to the brink of bankruptcy. Sometimes beyond that brink.

Consider zooming out and looking at this picture through a different lens.

Customers make purchases based on perceived value - and this perception is subjective. Sometimes getting a lower price is perceived as more valuable, but many times it is not. Sometimes a customer will perceive a custom personalized experience as more valuable.

Sometimes the customer will perceive ‘leading edge technology/tactics/techniques’ as more valuable. Some care more about saving time than saving money. Some care more about saving energy/effort/concentration that they have to put in. Some want to pay for a shortcut. Some want to pay for prestige.

A personal trainer has limits to how much extra perceived value they can add by lowering prices. However, there’s almost no limit to how much value they can add when you consider all these other potential ways value manifests itself. There are literally Trainers that charge 10x the rate of a competitor.

Why? Because they can offer clients more of what they consider valuable and successfully convey that through their marketing message. So challenge yourself: What do your clients consider more valuable?