Help - competitor killing our business

[geoffb]

Advice needed please

We sell an garden product that is made in England, our competitor sells the same product (looks slightly different) which is imported from China.

Ours is bigger - more functional and better designed and has more 'additions to it'.
Our website shows loads of photos, full descriptions, it has live help and a forum.

Our competitors doesn't - just shows a price, colour and small description (doesnt even show the size so very misleading to customers as what they get is too small to be useful)

We have one small council tender, our competitors have hundreds.

Our products used to be priced the same - (ours a couple of pounds more)

Last week our competitors slashed their prices knocking about £20 off the price.

As they have such a huge amount of sales they can 'pile them high sell them cheap' making small profit on each sale because they are doing loads of sales.

we can match their price (because we make our product) but it would cut our profits by half - so would have to sell twice as many - but compete directly on price.

Would you

a) cut the price to match our competitors and have to sell lots more
b) keep the price the same - fewer sales

Im really struggling here, we have spend loads on advertising - and havn't seen any benefit, we should be doing heaps of xmas sales - but aren't

any help gratefully received

 

[robertt]

Who has taken your advertising spend?

Why did you spend that money?

 

[S-Marketing]

Attempting to compete on price will just help them kill your business quicker.

What you are doing wrong is not succesfully communicating your differentiated offering to your target market.

Without knowing what the product is I dont think I can be much more specific.

 

[geoffb]

Hi - unfortunatly I can't give what the product is ...

We spent £1000 on half page adverts in two magazines ... no response ....

What you are doing wrong is not succesfully communicating your differentiated offering to your target market.

do you mean that we aren't telling the customers enough about our product ?
and explaining the plus points
if so - then we are - 1000% more than our competitor with photos, comparisons, videos .

 

[cjd]

If you find that people are buying the competitors product rather than yours you need to establish why - at the moment you're assuming it's just price - is it? Could it be that the competitor's product is 'good enough'? Maybe it doesn't need to be as good as yours is? Difficult to know without more information.

A fairly risky strategy would be to increase your price in order to make yours look even better; you can't win competing on price with a lower cost competitor - you need a differentiator.

 

Afraid price is nearly always the bottom line on common or garden products unless you can demonstrate clearly the advantages of using your product over the cheapo models or you are competing in an esoteric market.

Earl

 

[S-Marketing]

I've said it probably 20 times on here but ill say it again. Just because you have spent money on advertising and it didn't work, it doesn't mean it doesn't work, just that you did it wrong.

The key word in my sentence was succesfully. You may be communicating all sorts of things to the customer and may give them every single detail 'you' think they want. You obviously aren't communicating to them what 'they' need to hear in order to make the sale.

As someone mentioned, if the competitors product meets the customers needs, then they will buy the cheaper one. Yours could be twice as good, but if the other is good enough, in the customers eyes, you will lose the sale.

You are going to need to give us more info if you want more info in return.

Hi - unfortunatly I can't give what the product is ...

We spent £1000 on half page adverts in two magazines ... no response ....



do you mean that we aren't telling the customers enough about our product ?
and explaining the plus points
if so - then we are - 1000% more than our competitor with photos, comparisons, videos .

 

[OldWelshGuy]

How do you know the competitor is selling loads?

Unfortunately if you can't convey/your potential buyer is not interested in quality/area of manufacture, then that leaves price.

 

[S-Marketing]

The obvious example is garden machinery. This is where the real differentiation and value drives sales. Manufacturers such as Stihl and Honda do exceptionally well. Their products may be 2 or 3 times that of competitors, but they have ensured that everyone who matters, knows that they are at least 5 times better.

As Earl says, if you cant communicate and demonstrate the added value of your products, you are, unfortunately, competing on price.

Afraid price is nearly always the bottom line on common or garden products unless you can demonstrate clearly the advantages of using your product over the cheapo models or you are competing in an esoteric market.

Earl

 

[Deleted member 59730]

Are you relying on web sales?

I am facing a similar problem. I have many good loyal customers but sometimes we meet resistance on price because our main competitor sells cheaper than us. Nearly all our sales are made by reps face to face. We have decided this year to offer price flexibility but only to those customers who make it a clincher to buy. We have developed a number of strategies to get something back in return for the price concession such as more display space, more products, minimum order quantities etc.

 

[ShortCouture]

OldWelshGuy has a point. If they are selling loads why would they slash the price? They will win council contracts because councils buy on price.

You cannot (and should not) compete on price. Yours is made in england, I would rec that you use that as a selling point. MiE is very popular now and I can imagine very much so with gardeners.

Is your product over engineerd? or are you aiming at the wrong customer?

You don't say how much the product is, are we talking £20 or £200. Stretchy is right in all points. You can try to get editorial coverage rather than place ads. Editorial is always better believed that an advert.

Without knowing what the product, price or the target market are, it's v difficult to advise specifically.

I don't know why people here are so secretive about things - your product info is in the public domain so why be secretive here?

 

You cannot (and should not) compete on price.

You can not be serious 98% of retail business competes on price.

May not be needed for little women though.

Earl

 

[BusinessDevelopment2305]

I completely agree with Stretchy, when your getting infront of these prospects you need to be differentiating between the features of your product and the benefit to the customer.

 

[ShortCouture]

You can not be serious 98% of retail business competes on price.

May not be needed for little women though.

Earl

I am in a niche market you are right so there is not so much price competition - but the principle is the same. I am manufacturing my clothes in the UK. I cannot compete on price with the high street, so I will not. I will trade on English manufacture, the style, quality of the clothes and the fact that they are made specifically for shorties.

This is the same for the secret garden product - to explain what I meant - you cannot compete on price because their cost is much lower and the product is inferior - they will always win. So compete on English Manufacture, quality, style, long life, customer service, delivery, green credentials - whatever else you have that your competitor does not. You are probably aiming at a different customer than they are, perhaps you need to target that customer more closely.

I'm dying to know what this product is now.....

 

[LicensedToTrade]

A product that is more functional and of better quality isn't always going to be the preferred choice for everyone. Take for example....Company A sells a hand carved fork with a perfectly engineered handle for extra grip, it is super lightweight and made from space-age materials. Company B sells a fork made out of metal. Both forks are designed for the purpose of carrying food from a plate to your gob but the first one costs £99 whereas the second costs a fiver.

So.... everyone is going to buy the second cheaper one right? Not necessarily! Because low and behold, some forks (and cutlery in general) are known as Giffen or Veblen goods (google it). In brief this means that the demand for these products increase as their price increases, therefore avoiding the elasticity of demand model.

You should identify if your product conforms to the Veblen. If it does then you can target your efforts more effectively to the correct customer segments, rather than promoting to individuals who have no need for a product of this quality.

If your product isn't a veblen type and conforms to the elasticity of demand model then you need to decide if you are selling an over-engineered product for a market that is satisfied by a product of inferior quality. At which point there are only two ways to change this, Margin Aspiration or Cost. If you can take a hit on margin then you can compete, if you can't then you can review your cost which might result in you using inferior materials or doing some low-cost sourcing (china) of your own.

It would help if I knew what product I was talking about here?

 

[APC Nexday Overnite Ltd]

Don't know if anyone else has suggested this.

You have a all singing all dancing garden products it is built better has adjustable, detachable, gizmos attached etc etc.

They have a shoddy small basic tool (but they're selling more of that).

Why don't you just have a rethink. Produce a bog standard one. One that competes with the one from China and obviously because it doesn't have all the extras it will be cheaper for you to make but along side that cheap product why not also offer the alternative "Garden Tool Pro ++" (which is your current product) which is more expensive."But look what you get for that price....."

 

[ADW]

Have you tried making the most of the "Made in UK" part. People are quite patriotic to a certain extent right now.

You do need to find out why they were outselling you before they cut their price if indeed they were. Do you have access to stocking their product? No harm offering both if that would help combat them.

 

[strikingedge]

If you reckon your potential customers are price checking your product then immediately going off to buy at your cheaper competitor.....why not tackle that head on?

Do a comparison table on your website of features against the named competitor and issue a challenge - if you prefer cheap and cheerful to superior quality and size, we've saved you the trouble of googling....and give a link.

It does mean you get the comparison done on your terms.

Higher price is a differential - but that should mean a better quality product. If you can satisfy customers that's what you are providing, you should knock the competition out of the water, because who cares about an extra few quid for a long term purchase so long as they are making a smart purchase.

I haven't seen either product, but you should also ensure that your branding and presentation communicates quality and back it all up with a prominent money back guarantee.

 

[harryboon]

Sadly because of the lack of info about what you are selling no-one will be able to give you the advice you want.

There are people on here who could give you cracking advice but will require more product info - do share you could make some sales you never know!

 

[deniser]

I would just sell the same one from China.

Sad as it is, no-one cares two hoots if something is made in England or in an overseas sweatshop employing child labour.

 

A product that is more functional and of better quality isn't always going to be the preferred choice for everyone. Take for example....Company A sells a hand carved fork with a perfectly engineered handle for extra grip, it is super lightweight and made from space-age materials. Company B sells a fork made out of metal. Both forks are designed for the purpose of carrying food from a plate to your gob but the first one costs £99 whereas the second costs a fiver.

Pretty sure Ford and Ferrari have discussed this very subject.

Earl

 

Have you tried making the most of the "Made in UK" part. People are quite patriotic to a certain extent right now.

True I notice them buying third world goods from M&S in there droves.

Bet even Sherlock would have trouble finding UK made products in the shops.

Earl

 

[geoffb]

lots of replies so thank you very much for your time....

the reason that I dont want to give the product is because it is a very niche market, so the competitor will know immediatley.

their website shows their product - 1 photo, it doesnt say that its an import, it doesnt give the size, they even show an inflated RRP with their price underneath (and they have never sold this product at their RRP displayed which I know is against the law but I can't do anything)

Our website has about 50 photos of our product - its written over and over thats its made in England, it gives full dimensions, videos of how to put together.
We have our product next to the import to show physically the size difference, we have testimonials on our site.

A few days ago we had an order through from a customer who ordered extra bits for their product.
When they were delivered he phoned me to say that the bits never fitted, a few minutes of pondering until I realised that he had actually bought the competitors product and got our websites mixed up and order the extras from us.
The man actually said to me I wish I had bought yours first - because they were bigger, and wouldn't have to spend extra money making his item bigger.

Many large companies sell their product, many councils use it. I phone businesses constantly trying to get them to choose a uk product over a chinese import - that I can match on price - and better , but they aren't interested in us, only the competitor - because they are a bigger company.

The selling price is £68 we sell wholesale at £43 it costs us £22 to make.

they have now dropped their price to £49 for a similer looking - but hugely smaller product.

its a difficult one !

 

[Experienced IT guy]

Well you should say (on you site) Made in UK, dont be fooled by other inferior products - specify the performance / capacity, compared to brand X, state where you provide more bangs per buck. State why you product is better - offer longer waranttee...

If your product is better....

Just my 2p....

 

[geoffb]

Why don't you just have a rethink. Produce a bog standard one. One that competes with the one from China and obviously because it doesn't have all the extras it will be cheaper for you to make but along side that cheap product why not also offer the alternative "Garden Tool Pro ++" (which is your current product) which is more expensive."But look what you get for that price....."

The price to make ours is the same as to import from China - I can sell at the same price and still make profit. However If I lower ours, they will lower theirs - which is what I don't want to do

Do a comparison table on your website of features against the named competitor and issue a challenge - if you prefer cheap and cheerful to superior quality and size, we've saved you the trouble of googling....and give a link.

already got it - a table showing size, price, country of origin.


another problem is that we don't get repeat buyers. Once this item is bought then it will last them a life time.

 

lots of replies so thank you very much for your time....

the reason that I dont want to give the product is because it is a very niche market, so the competitor will know immediatley.

their website shows their product - 1 photo, it doesnt say that its an import, it doesnt give the size, they even show an inflated RRP with their price underneath (and they have never sold this product at their RRP displayed which I know is against the law but I can't do anything)

Our website has about 50 photos of our product - its written over and over thats its made in England, it gives full dimensions, videos of how to put together.
We have our product next to the import to show physically the size difference, we have testimonials on our site.

A few days ago we had an order through from a customer who ordered extra bits for their product.
When they were delivered he phoned me to say that the bits never fitted, a few minutes of pondering until I realised that he had actually bought the competitors product and got our websites mixed up and order the extras from us.
The man actually said to me I wish I had bought yours first - because they were bigger, and wouldn't have to spend extra money making his item bigger.

Many large companies sell their product, many councils use it. I phone businesses constantly trying to get them to choose a uk product over a chinese import - that I can match on price - and better , but they aren't interested in us, only the competitor - because they are a bigger company.

The selling price is £68 we sell wholesale at £43 it costs us £22 to make.

they have now dropped their price to £49 for a similer looking - but hugely smaller product.

its a difficult one !

put up as large a picture as will fit on the page to emphasis the size difference and quote the cubic capacity if applicable.

the larger the picture the more the size difference is shown and the quality of the product.

Earl

 

[Scott-Copywriter]

Sounds to me like you need a copywriter or someone who can look at your sales conversion rate.

I rarely say this so directly, but it really seems like your solution could be a powerful sales page (and sales copy) which actually gets across the reasons to buy your more expensive product (providing the reasons are there in the first place, of course).

 

[braddo]

Interesting thread.

Not much information has been given on how the competitor markets themselves. And how the OP markets his UK made product.

The appearance of the website is an important factor, but it's insignificant if the real problem is an absence of marketing strategy (and/or budget).

To use an old analogy: Mcdonalds make average burgers but market them well. A hamburger shop could make the best burgers in the world, but they probably don't stand a chance of communicating this to the market if they have £1000 /year to spend on advertising.

 

[patientlady]

Hi geoffb
I am intrigued what product for a garden would a council be interested in for Christmas Grit bins that have lights maybe he he, anyway...
Also wondering are you happy, within reason, the sales that you are currently achieving or are you just upset that the competitor is apparently getting more sales than you?
Your competitor will always make more sales than you because of the price. There are probably more Guess/Gucci handbags sold at Blackbush market in a week than the genuine articles worldwide, but there cash margin will be less of course.

If your product is superior and the genuine article market it as so! An original Guess handbag for me every time!

 

[Mate]

do what your competitors do, bring your product from China. Find a manufacturer in there, you'll cut your costs considerably so you can compete on price.

 

[Mpg]

I'd suggest PM'ing your link to the clever bods in this thread so they can give a little better info without leaking.


Oh and send me it aswell

 

[websnail]

For what it's worth I've been in a similar situation regarding a product I've designed manufactured and done some serious work on to promote, document, and support.

There's now a whole host of two a penny copycats who've bought up my kits, seen the pound signs and just abused my instructions, resources, etc... to rebrand them as their own and sell similar units, with poorer components and cheaper.

Where they've gone wrong is in the support, warranty and communication department and it's this, along with quality, that I've targetted to make my product (and service) stand out from the cheap seats.

In much the same way you need to figure out your strengths and start playing to them.

One of the things that nobody seems to have picked up on is the lack of information on how people are finding your competitor and/or the product. If it's web searching then you need to look at the copy writing suggestion coupled with some good SEO research to ID the best keywords, terminology and get it all in there.

All those videos, and supporting images, etc... may also be counter productive in that you may be bombarding your potential customers with too much information and leaving them wanting something that just "does the job".

All in all, getting someone (a few someone's would be best) who has no prior knowledge of your product, a clear ability to communicate their thought processes and some brains, to look at the different offerings and then tell you why they want to go for X, not Y... Prepare to get some very unpleasant truths out of it though..

Good luck.

 

[salesman_northeast]

I could offer a couple of things,
1) in advertising your message is not getting across or intriguing your client to call you, price isn't every thing
2) how do you are your sales persons respond to warm leads and do they make their own?
3) Marketing isnt sales or advertising, and their are lots of clever ways to market your company cost effectively.

I would look that those points first as others have said as they all fit together and it can be only one done wrong or could be all three that will lose the sale.
Me personally im an excellent marketer and sales person, but put me in front of government and local authorities I cant do any thing, im on a different wavelength and cant do tenders, so make sure you have the right people doing the right job pm me if you want

 

[deniser]

Are you actually getting the customers through the door though? It doesn't matter how you promote the product if you are not getting the virtual footfall onto your site in the first place. Are people actually coming across your product in the first place?

 

[geoffb]

Lots of good advice - thank you

we are actually number 1 (and 2 ) on google they are 3 & 5 - they are always number 1 on adwords, so must spend a fortune, but yes maybe my webpage isn't upto scratch.

I have a bounce rate of 53% average time on site of 3.58 mins - a goal conversion rate of 2.35 (if Ive done it properly) 4079 absolute unique vistors over the month (24 Oct - 23 Nov)

I don't know if thats good or bad, but I think you are right I need a good copywriter to give an apraisal

Geoff

 

[KernowQueen]

sorry if this has already been asked & answered - how do you know what volume your competitor is selling? what his profit is? if he was making a killing, why has he lowered his price?

you can't force people to buy your product, even if it is much better! as already suggested, perhaps tweek your website copy or try to get some consumer feedback - otherwise, let it go & focus on the rest of your business.

 

[braddo]

Lots of good advice - thank you

we are actually number 1 (and 2 ) on google they are 3 & 5 - they are always number 1 on adwords, so must spend a fortune, but yes maybe my webpage isn't upto scratch.

I have a bounce rate of 53% average time on site of 3.58 mins - a goal conversion rate of 2.35 (if Ive done it properly) 4079 absolute unique vistors over the month (24 Oct - 23 Nov)

I don't know if thats good or bad, but I think you are right I need a good copywriter to give an apraisal

Geoff

Geoff - are you maybe focusing too much attention on your website, at the expense of other more appropriate marketing avenues?

Is there any evidence to suggest that your competitor's success is driven by website hits, and google searches? Or are you just assuming that to be the case?

I know that I personally wouldn't spend a lot of time looking at a garden product website. However, I may well take time to look at a display in Homebase if I was there, and the product was something I could see myself benefiting from....

 

[ShortCouture]

do you sell only one product? or a range of garden products? if you have a range of products you could give us your webpage and you'd get much better help then. I still think you don't need to be secretive. You haven't said anything that is not in the public domain and you haven't said anything bad about your competitor.

 

[geoffb]

unfortunatly our products aren't in garden centres, some of the competitors are with people like suttons seeds, again Ive phoned them and told them about our product - even sent them a free sample - but they continue to sell our competitors products.

We had a council wanting a tender - we gave them the lowest price possible - giving them the strengths ie produced in the UK - and they still chose the chinese import

Maybe the competitor is having a hard time to, unfortunatly its impossible to tell, which is why again I don't want to drop our price - as I would have to sell twice as many.

 

[GreatSEO]

I have to say that there are so many factors to take into account that I am surprised there is so many suggestions already. I would use the nack to basics methods and look at it from the very beginning.

There are also so many things that you could so for example -

Where are your competitors advertising and are you?
Why have they dropped their price is it because their sales are falling?
Who are your competitors and is it the website that falls down, copy, design, seo etc etc
Do you have other advertising methods?
Where do you target?
What retail stores have you tried?

I have helped clients put over 50 products on the shelves of Tesco, B&Q, Asda, Morrisons, Next and other fairly high profile corporate businesses. It is not hard when you research, refine, and target properly with the right sales presntation and pitch.

Maybe you need some expert help and it might be a good idea to PM your details to one of the bods in this post as mentioned earlier. Feel free to PM me if you want with the details no cost just a general chat that may well give you some good pointers to get you on your way.

I Hope this helps

Dave