Recently, my company which is part of the Young Enterprise scheme took part in their first sales event of the school year. This was at the Worcester Christmas Fayre at which we had a stall and were selling our own packages of a festive mug, Christmas flavoured spiced tea and some biscuits. This was all completed with cellophane gift wrapping to make it appeal to the buyer.
When setting up our stall we realised that there was another YE company doing a product which was very similar to ours for a cheaper price and this arose a question in my mind. Should we drop the price to try and compete on the same level with them? Do I rely on the sales ability of my team? or Should we pack up and go home because there was some competition? Obviously the last was not an option as in the business and economic world it is important to have competition to make sure that everyone is working to their best to bring our their natural competitiveness. Starbucks and Costa are examples of this, if they didn't have each other they would not be such large companies.
I decided to keep the price the same, rely on our sales technique and remain confident in the product and price which we had. This payed off when we managed to sell out of our product by the end of the day and our oppositions stall being very quiet with little sales made. This, however, got me thinking what is the best thing to do when faced with the same problem that I have but on a larger scale?
marketingdonut.co.uk agreed with the plan that I had as he says that changing your original price can do more harm than good with the theory that it makes you look weak and you chose the price the reason so stick with what your went for and go for it. Due to the fact that at the stall we had 25 units to sell we were able to focus on the value rather than the volume.
In a market environment it is very easy to get carried away. To try and cut prices right there on the stand can takes seconds when before you have spent weeks deciding on the price of a certain item. I also spoke to our business advisor about the issue half way through the day and his reaction was that if we were managing to sell product at our original price, why change? What is the point of getting less profit for your good or service. That is a principle of Economics and one I will keep in mind. Companies will maximise profits, however they are able to.
