Lise is a fashion designer in Norway who complained that the only way she could make a decent living is to either reduce her prices or make much more ordinary products she wasn’t passionate about. She felt stuck between a rock and a hard place and decided she had only two choices: to sell cheap or to sell out.

This is because she was dealing with the wrong kind of customers. Those inappropriate customers are often known as ‘people round here’. The solution to her problem was to find new customers who actually want what she could uniquely offer and were prepared to pay the price. They may not be conveniently located in your area, but by challenging the assumption that we must sell locally, we can win on both counts. We can find customers who want our undiluted talents and are prepared to pay handsomely for them.

When you select the wrong kind of customers you either end up selling cheap, or selling out.

Often, a problem presented to me by clients as an issue of pricing or profitability is really a matter of strategic marketing. Some customers do not fully value what you can offer. Others might not want all of your expertise or products, just part of them. Consequently, they’re not prepared to pay the full price. Why should they? They can probably get these elements of what you offer from other places. These customers do not suit you properly. They can shop around and go to rivals who offer what they need. Hence, they want a reduced price because they know they can go elsewhere. Do not drop your prices to win these customers because they are not the right customers. This is how the lack of strategic marketing can lead to you selling cheap.

As for selling out, this happens when a business responds to the needs of the wrong kind of customers. After listening to the wrong kind of customer, they alter their service or product in such way that it takes them into danger areas where rivals dominate. This is absolutely the wrong direction. Instead, we need to head for the high ground we can dominate, not be lured into competitors’ territory. We need to find our own specialist niche. We will find the right kind of customers there.

This is another example of how strategic marketing beats operational marketing.

Instead of trying to use operational marketing techniques to increase prices, or convince the wrong kind of customers to buy at the right kind of price, we look at the bigger picture. Strategic marketing takes a more comprehensive view of the business. Strategic marketing may mean changing the customer base substantially.

Key Points

If you find you have to drop your prices or change your product to what others can do, it probably means you’re dealing with the wrong kind of customers. Instead, find the right customers who are prepared to pay the full price for what you can uniquely offer.

What to do next

• Recognise that when you are asked to drop your price there is something wrong with your marketing strategy. It either means you’re dealing with the wrong customers, or offering too generic a product. Instead, focus on what you can excel at, and find the right customers for your business.