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It's Cheaper on the Internet | How to Compete with the Internet

Posted On - 19/12/2012 14:58:44


            The Internet is NOT Competition
Here's a simple question: can you compete with a budget laptop sold online for £259 when your price is £289? The answer is yes - and you can do it without changing your price.

First, a bit about budget laptops …

The same question could be posed of other products just the same; we chose laptops because they're a great example of a product sold on price - at least at the budget end. Plus, there are other factors that make selling budget laptops tough.

  • For a start it's a highly competitive area, and unusual in that there's effectively a discount rather than premium for the main brands.
  • There's also very little margin - typically only a few % points only. This is markedly different from system-builds. Then again, it should be. System-builds should have more margin because the pricing reflects your added value. The work you've put in to spec the system and buy the parts, then assemble and configure it, and finally provide warranty and after-sales support. With laptops pretty much all you do is buy and sell them.
  • Then there's the simple fact budget laptops are as good as a commodity. They're widely available and the pricing is well publicised. There's little to differentiate yours from the one on sale down the road. And selling them doesn't really call on any expertise. All you need do is explain things to the customer - that's assuming they even ask.
  • They're a relatively high-ticket occasional purchase. And they're a discrete product meaning they do pretty much everything people want them to. All of which means there's not much opportunity to bundle other products.

So all-in-all, they're a tough sell. Problem is if you want to be a credible IT retailer, it's a product you have to offer. So what do you do?

The answer lies in how you go about promoting them. If you lead your promotional strategy with budget laptops, if you make it look like they're your specialism, you ask for problems. You attract customers only in cheap laptops and the best deal they can get. So don't do it. Lead your promotions with something else.

And now the main event…

Well, almost. First, some explanation on how we've addressed the £259 v £289 question. We've come at this two ways.

First the specific issue: how to differentiate your laptop in the face of fierce price competition. We've avoided suggestions involving bundling services up-front because this is additional work and cost. We've also looked for ways that help you to sell the product and prompt additional business opportunities. We've come up with two particularly strong suggestions you could implement immediately. There are undoubtedly more, and we'd love to hear your suggestions.

Second, we've revisited the classic in-store situation of a customer standing in front of you saying they can get it cheaper online. And to help we've provided step by step guide on how to tackle this.

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