How Manufacturers Compete Against Low CostBy: Brian Rhodes, Published on Jul 29, 2014
"I'll take whatever's cheapest" is perhaps the most hated phrase any salesman could hear.
Yet high cost is the biggest complaint of many security buyers.
So how do manufacturers successfully sell against low cost options? We asked a panel of manufacturers:
"How do you deal with low cost competitors, especially very inexpensive ones? What tactics or countermeasures do you use?"
Manufacturers emphasized 3 key themes in how they counteract low cost options.
- Better Support: The most popular method of dealing with low-cost competition is to out muscle them on supporting the resellers or end-users employing their equipment.
- Emphasise High Quality: Manufacturers repeatedly mentioned they stress their premium build, reliability, and features help to de-emphasize the appeal of specifying products only on the basis of low price.
- Question Value: The flip side of stressing high quality is amplifying the risk of low quality by questioning if low price options are able to get the job done.
In each of the sections below, we expand on those keys with manufacturer comments:
Higher prices do not always mean bigger profits, a point that manufacturers stress when mentioning their products carry technical support, warranties, and pre-sales assistance:
- "We talk about quality, warranty, technical support. Mission critical applications can not depend on a cheap system for any of these. We also talk about established reputation and time in the industry."
- "The reality is that people as a whole- manufacturers, integrators, and end users alike speak the same language- support. All of the above support whomever provides them with the best support. Additionally, this business is no different than any other business, it's a relationship business. And if you have the relationship and can provide / get the requisite level of support it doesn't matter what it costs."
- "I have been telling people that they can typically have 2 out of 3 things: Best quality, best service, or best price."
- "#1 Superior products and support."
- "Provide additional values for end-user (e.g. 3rd-party integration or centralized management system)."
- "Reliability and future support availability. You don't want to be the guy to have to go back to management after 1-2 years and tell them it all has to be replaced b/c the company we chose is out of business."
- "Tech Support, Warranty, Customer support, etc."
- "Competitive warranties (3 to 5 years) / No Questions Asked Warranty Extended maintenance agreements with guaranteed response times Prompt callbacks to missed calls Strong after sales service team with a proactive approach Reliable 24/7 tech support service Personalized customer service"
Emphasise High Quality
Another common strategy manufacturers leverage is drawing attention to the superior performance or powerful features of their products compared to cheap offsets. Potential customers may not fully understand the advantages of higher-priced options unless they are explained:
- "Our network security cameras' high image quality and onboard analytics take our products out of the direct line of fire when it comes to low cost competitors. While there will always be a low cost network video security market, it is simply a market that we do not wish to compete in."
- " We create strong testing and analysis comparing our quality to the inexpensive ones."
- " I focus on our advanced capabilities, quality, and reliability."
- " I usually tout [our higher priced brand's] image quality, 3 year warranty and better performance and reliability."
- "We try to make emphasis on product reliability and the fact that there will always be someone to sell it cheaper at any product any industry. But the reliability cannot be substituted, you make an installation and you can go home pretty confident that the thing will work. Inexpensive ones there are good and bad but overall its the quality control is general not so good."
- "While picture quality is important, so is the reliability of the camera."
- "Highlight product reliability & service."
- " Stability, Reliability, Performance."
- "We consider ourself as an innovation manufacturer and our responsibility goes beyond moving the box."
Question Value (of Low Price)
The last common key was to frame the importance of choosing equipment wisely because their security roles are so important and the margin for malfunction is critically slim:
- "Simply ask the client the question - "Would you use this product if your life depended on it?"
- "If the customer is only looking for low price and not performance then he is shopper not a customer. Sell performance."
- "Emphasize advantages and value of high-quality. Avoid price-competition."
- "What are they willing to put at risk to save a few dollars? That idea can cause cheap cameras to lose their appeal."
- "Side by side comparisons often eliminate the lower end product."
- "I usually tell them that you don't truly know the cost of a camera until the warrantee period is up, and if a tech needs to put the keys in the truck to visit the site, the difference in price is gone."
- "We ask the customer to define what they really want versus what the low cost competitor offers. To add, I sell me first, product comes second. The best product is nothing without the relationship."
- "I also point out the deficiencies of the competitors line. Things like cheating on spec sheets, including inferior lens technology, etc..."
- "There are users at one end of the spectrum who's only pain is the price. I don't try to compete here. There are users at the other end of the spectrum who have dealt with the headaches of cheap systems. They are looking for reliability, easy management (whether tens, or thousands of devices), health alerts and getting some ROI out of the system by improving the efficacy of your customer's department (e.g. Loss prevention). In a crowded, highly competitive, space like video surveillance you cannot compete on the basic elements and price alone, your product must be more valuable to your customers than others if you want to survive."