DEMAND and SUPPLY are the variables of every market and every product or service that has been traded since the day bartering began. Are prices the result of a compromise reached between the two of them? But is it really true that the right price is defined by demand and supply? And if so, is that also true for our sector?
Has the competition been trivializing our products for years, reducing it almost the level of a commodity? Is this a peculiarity of our sector, the cable sector, or are there peculiarities in every sector?
If we talk to any specialist in any sector, the answer is always the same! In my sector it’s different! PRICE IS KING!
But I think this is the reality: the Market is different when two people from any sector, one representing the demand and the other the supply, are NOT able to convey the Key Selling Points (KSP) of their products effectively! Especially if at the root of the matter is a product over 80% of which consists of a commodity! In our case it’s COPPER.
There are companies, be they manufacturers or distributors in our sector that we all know, that for years have been busy building a solid BRAND AWARENESS that is lasting and recognized by end users on a GLOBAL level!! It is the BRAND that makes your customers pay that extra QUID, that Premium Price.
But how do you create added value that is recognized by the end customer? Bear in mind that added value does not necessarily have to be an additional service or a better performance of the Cable itself and hence of the product! Added value is also created by an EXCELLENT IDEA that the customer recognizes only and exclusively in his head. That is the case with BMW or Porsche. Why is the client often willing to pay a premium price not only for cars from the top of the range but also for entry-level vehicles? Purely because it comes from a particular manufacturer or distributor, their product gives the end user a sense of security about their purchase, and in our sector about the installation, and about the quality without establishing whether or not it is actually better from a technical point of view. Helukabel and Lapp Kabel are examples of this at a global level.
Here’s a challenge for you based on a consideration of the following variables:
C= COST, P= PRODUCT PRICE, V= PERCEIVED VALUE
Would you want to work in a sector or CABLE company or to OFFER YOUR CABLES where:
THE COST > THE PRICE
Or where:
THE PRICE > THE VALUE PERCEIVED BY THE CLIENT
Or where:
THE VALUE PERCEIVED BY THE CLIENT > THE PRODUCT PRICE
Think about it and maybe I’ll let you know next time!