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Stop competing on price!

Is your small business trying to compete on price? Are you afraid of the “big box” retailer that has the ability to negotiate lower costs? In most cases, your fears are unfounded because what you really need to do is differentiate yourself on value.

According to the Ipsos Mendelsohn Affluent Survey — a nationally representative study of more than 14,000 adults living in households with at least $100,000 in annual household income — as reported by AdAgeStat on January 4, 2012, value remains a top priority in the marketplace. Stephen Kraus and Bob Shullman report that “78% of affluents agreed, ‘When it comes to quality, I believe you get what you pay for.’” Meanwhile, they report, “Only 18% of affluents agreed, ‘I tend to buy based on price, not quality.’”

Herein lies the opportunity for you to differentiate yourself and gain market share. Ask yourself, “What unique value can you bring to the consumer?” In an apples-to-apples comparison, where the consumer perceives an equal level of value, they will choose the best price, but if you can create an apples-to-oranges comparison with a perception of better value, no longer is the price the primary concern and you can win sales even with a higher price point—so long as the perceived value you offer justifies the price.

For the full survey report including interesting information about online shopping habits, read Affluency: Three Trends to Watch for 2012.

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