What's wrong with 'We won't be undersold'?

For some some businesses, aggressive pricing is the number one marketing strategy; it’s what attracts customers in, and the reason they buy.

Customers are drawn to companies like Best Buy who have just been accused of having a public website with more attractive prices than those the customers find on the intranet at the time of purchase inside the store. You can read the whole story by Jason at courant.com.

You can see from the 196 comments posted that people feel strongly about being tricked. We don’t expect the numbers to lie and it is especially more heinous when, as in this situation, low prices are a core premise.

Seth Godin’s blog entry ‘We won’t be undersold’ first alerted me to the Best Buy story. Here he says: ‘If you have a won't be undersold motto, the very best thing that you can do is find customers who find a better price somewhere else... and then give them the discount. Why? Because it proves you're not lying, and it spreads the word. Those customers are heroes.’

... To which I would add: Beware the ‘We won’t be undersold’ tactic for these reasons:

1) Do you want a whole lot of bargain hunters as customers? Are they your target audience? If they are, I hope there’s a big population of them as the margins are going to be slim.

2) This tactic rewards customers for placing the highest value on price as if price is all that matters. If you have no plans to offer more in terms of quality, service, ambience, creativity, and you wish to disregard the environmental impact and community aspects of shopping then go with the ‘We won’t be undersold’ tactic. Otherwise don’t.

3) You give your power away to your competitors and suppliers; you run the risk of being manipulated.

4) Don’t you want to retain ultimate control over your margins?

5) Can you be bothered dealing with the ‘paperwork’ and transaction costs of refunding money on what was a done deal?

© 2007 Jane Francis Please acknowledge the source if you copy this material.