TOW#507 — Just as long as it’s cheap
Very often, in conversation with local managers and business owners, we argue about (discuss) the concept of ‘cheap’. Since we’re very sensitive as a market to prices, and because of our low economic standard, they regularly say that they have to offer products or services that are ‘cheap’. “Everything sells around here, just as long as it’s cheap” is the attitude of most managers here.
First, let’s make it clear that ‘cheap’ and ‘expensive’ don’t exist as concepts. What do cheap and expensive mean!? For who is it cheap and for who expensive?! Some people drive cars worth €100–200,000. Is that cheap or expensive?! Perceptions will mostly depend on the positioning of the product or service. Specifically, who it’s intended for. Each product and service has its own target group, or as the old saying goes “there’s a lid for every pot”. Whenever a business is being developing we need to be aware of how and where the product or service will be positioned.
The strategy will itself decide who we’re targeting, what percentage of the market, what our potential is and which product and service we’ll offer. If we set things up this way and develop a clear and proper strategy, the concepts of cheap and expensive won’t matter anymore. From a buyer’s point of view, ‘expensive’ is something we can’t afford. But that doesn’t mean that the product is positioned higher in price in relation to its value (though there are some).
In any case, it’s understandable that when you have a lower market standard and you want to sell a product or service to a larger part of the market, you need to position yourself with a more economical offer. But here too, one should know and take into account that there are several different levels of ‘economical offers’. So don’t always look for and offer the ‘cheapest’ products / services, but make a good strategy, define a market share (think about whether it fits your business vision) and place yourself in your market segment.
Wishing you success with the changes to come,
Petar Lazarov
“Tip of the Week” Team member
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