Value Proposition

How Small Business Value Competes with Price

Small Business CompetitionIn most industries, there is a big player usually taking market share based on price. You’ve seen the ads –

Bunnings – Where lowest Prices are just the beginning.

Officeworks – Big Ideas, Lowest Prices

Specsavers – Stylish Frames, Great Prices … and so on.

As we know, small business makes up 90+% of businesses in Australia. Unfortunately, many of them can’t compete with the large corporations on price. So how then do these businesses be heard over the noise of the large corporations?

This question ignited great discussion amongst my fellow members of the Albany Creek Business Contacts (ACBC) networking group. With a terrific cross section of small business represented not only from industry perspective but also taking into account micro-business, small business who employ and franchise representation, it was unanimously agreed that the message is the value small business can provide can outweigh dollar savings.

If you are in the business of selling products, small business can struggle with competitive price in relation to large corporations because they don’t have the buying power of the larger competitors – for example, large organisations purchases products for resale in much larger quantities than a small business competitor thereby having a better bargaining position to drive the purchase price down and then, in turn, being able to resell at a lower price. However, in many instances, you get what you pay for – cheap, short life, limited service and in some instances, low value for money.

Which leads to the point that the Best Price does not necessarily mean the cheapest price. By way of example, Uncle Henry does weekend electrical work at mates rates. Henry has worked in the construction industry for 15 years however, he isn’t a qualified sparky but has done lots of electrical installation in his time. His price to do some rewiring work and power point installation works out to $150 plus a six pack (and he will require lunch and a chat). A qualified electrician, with 15 years’ experience as an electrician, who keeps his skills current, uses correct and appropriate equipment which has been correctly maintained to industry standards, provides a guarantee/warrantee in relation to their work done and carries all appropriate insurances in relation to their business/work charges for the same job $250.

Using this example, a price driven customer would use Uncle Henry and run the risk of unsafe work and loss of insurance in the event of destruction caused by the electrical work. However, look beyond the price as to the value for money proposition and in this event, I would suggest, the customer would choose the qualified electrician to do the work.

So how does small business communicate the value proposition in the market place in order to compete against those promoting based on price? Well my ACBC colleagues believe it is about reputation for the value of using the small business.

OK, well that’s great I hear you say, but how does a small business build that reputation and get it out there?

Well here is some suggestions:

  • Blog about your business and how you add value/demonstrate expertise. In my example above, the qualified electrician can blog about his safety processes/checks and balances, the equipment he uses and why, industry knowledge and scams customers should be aware of and so on.
  • Promote the ethics of your business.
  • Engage in referral networks like ACBC where people get to know you and form strong bonds with your business to promote you to others.
  • Client Nurture Programs to engage existing clients/customers to share the love of you.
  • Gather and publish testimonials and reviews about your business.
  • Don’t assume that people (even friends and family) know about your business – explain to them what you do and what sets you apart from the competition.

When thinking about your value proposition you wish to communicate to the market place, ask yourself – if all businesses were the same for a customer, what would make them choose one over the other?

(Blog contributors – Rob Carmody (Australian Integrated Communications) Sally Balwin (Balanix Solutions) Kathy Patterson (Brendale Stationery Supplies) Matthew Fox (Brisbane hosting & Web Design) Kirsty Newbery (Caring Cottage) Brad Davies (Conquest Pest & Termite Control) Scott Deaves (David Deane Real Estate) De Wet van der Nest (Express Air Con Cleaning) Oriano Giammichele (GT Racing, Mobile Mechanic) Rhennen Ford (Streten Mason Lawyers) Tracey Carter (Scrub Mutts) Jason Matthey (Insurance Web) Damien Jenkins (Australian Unity, North Lakes) Anne-Louise Underwood (SMS Toolkits) Bruce Hall (Wombat Electrical)

Albany Creek Business Contacts consists of local quality and reliable businesses who provide a wide range of services from home and residential services to B2B and commercial services. Our service areas cover primarily Albany Creek, Eatons Hill, Brendale, Aspley, Warner, Chermside, Strathpine, North Lakes. However many members will cover greater areas.

Albany Creek Business Contacts meet fortnightly on a Wednesday morning for a 7am breakfast and networking meeting.

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Situated in Strathpine on Brisbane North, we partner with our clients to assist them in their accounting, business management and bookkeeping needs. Our clients vary in industries from professional services (such as law, vet and dentist) to the trades (mechanic, bricklaying, plasterer etc), hospitality and retail. Are clients are located in the Pine Rivers area (including Brendale, Lawnton, Albany Creek and Eatons Hill) through to Kallangur, Petrie, North Lakes and Caboolture, as well as Brisbane South, the Gold Coast and various other parts of Queensland.

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