If you are a b2b product company selling in any market, you are bound to run into competitors that offer a cheaper solution.
This happens very often when you are selling to cost or value conscious markets like India. There will always be someone willing to sell it cheaper. Think of this as a never ending problem.
Once a solution is created and somewhat publicized, it gets only easier for others to replicate some aspects of the product. If your competition’s costs are lower or they are able to subsidize their customers then this can be a real deterrent for new and old players.
What do you do when this happens?
- You can walk away but how many times can you afford to do that?
- You can get in to a price match or lower to win the deal, but that that may not be sustainable
- You can convince the customer to pay more because you are a better solution, but this is easier said than done
1 and 2 are a short term plays and wont get you far, so let us focus on 3 and ways to achieve that.
How do you convince customers that you are a better solution?
– Smarter Positioning – you can do this with some work even with the product you have
– Innovation – offering a far superior solution – you can do this with lot of work and it will also take time. I will leave that for a longer discussion in the future.
Here are ways in which product positioning and targeting can avoid a direct comparison with the competition:
- Target a Niche – and tune your product and marketing to a specific segment of the market.Lets say you and your cheaper competition offer a solution for the the Finance function. Let’s say that you have (or build over time) a better understanding of the Finance function in Manufacturing. Now you can build (or have on the roadmap) capabilities that make it easier for that industry to use your product. You can also talk about how your product is “tuned” for Manufacturing and also have suitable description of your solution along with case studies and references. This will improve your win rate in that segment. Perhaps you can add more such “tuning” or modules by industry over time.
- Target a higher level buyer and tune your messaging for that
If your competition is selling to a Department or LOB, evaluate whether you can position for the CEO or CFO. Tune all your marketing and content accordingly. This means that you will reduce the chance of direct fight and actually have a decision made at a different level. This also means that the budget for purchase will come from a different pot. In general, higher the role, greater the say and access to budget.
Hope this helps. Would love to hear from you.