Are you a business opportunity seeker who thinks cut price, cut price, cut price?
Business opportunity seekers can win without cutting margins to the bone!
Many business opportuntiy seekers have no idea that they cannot sell to whoever they please at whatever price they please, but it is true. In the 1930â€™s, shortly after the Depression, small grocers were upset because they couldnâ€™t compete with the large grocery chain A&P. They went to court and Congress passed a law that is still in effect today called the Robinson-Pittman Act of 1936.
In a nutshell, this law says that manufacturers cannot give volume discounts to large chains that exceed the costs savings gained by the manufacturer by delivering a large volume order. Or to be clearer, the manufacturer can pass on large volume savings but cannot exceed those savings when determining price to large volume customers.
Today, tire stores are fighting against big chains like Wal-Mart, Sam’s Club, and AutoZone claiming that 13 different manufacturers are selling to these stores too cheaply. They can’t fight them on price, so they are hoping to get the government to step in to stop the steep discounts.
The truth is – they are right.Â Business opportunity seekersÂ cannot compete on price. I suggest that rather than complain and sue, that they try something different.
Let me tell you a story about the Cuyahoga Valley Scenic Railroad. All year long, the railroad sells tickets on its steam engine and people take a scenic tour by train. However, at Christmas, the tickets are impossible to find because they are sold out so quickly. Think about this. An open train car in the dead of winter in the darkness of night sells out tickets. And not only do they sell tickets, but they sell them for more than usual. The tickets were such a hot commodity, that eBay resellers were getting as much as $520 for a 4-pack. Why?
The railroad turned the ordinary train ride into the Polar Express. They had a conductor dressed up like the conductor from the movie, had a reading of the book, and even had Santa appear at the end of the ride.
So, what does this have to do with competing with a large chain?
The lesson is this: The train ride wasn’t about price at all. It was about participating in an experience. They took their average ride and made it extraordinary.
The business opportunity seekerÂ can do the same thing. You can reinvent your product to create an experience. People donâ€™t want to buy average or ordinary. They want something unique or spectacular or exciting. If you can find a way to repackage what you are already selling to provide them with an experience, you will no longer have to compete on the price.
Unless you can be the lowest priced on the block, you cannot compete on price. Therefore, donâ€™t try. Give everyone a â€œDisneyâ€ experience and charge people to get it.