Business observations from a consumer’s perspective !
I’m not a graduate of a prestigious business school, a financial mastermind or even an astute sales professional. I don’t have years of wisdom under my belt to dispense upon the masses or even the credentials required to write this article. What I do have is a profound understanding of what it takes for a business to gain access to my hard earned dollars. I’ve also had the experience of working for great and not so great companies and seeing how their customers are treated during the process of parting with their monies for the perceived value of the product/service they are being sold.
When I am in the market for a product/service the first thing I try to gauge is the expected quality of the offering and then I try to find the median between the cost associated with acquiring the item and the qualitative attributes of the product or service. I usually perform a search for a group of items within a certain price range, compare them to each other based on their similarities and then break them down individually based on the features I need versus the cost to acquire said features. There is usually a sweet spot where the price vs performance ratio is equal to my needs, and more often than not a compromise in which desired qualities are trumped by the cost savings of the item.
Based on my observations, there seems to be certain formulas that work well for some business models better than others. Whether it be a small operation with higher prices or an extremely large outfit with tighter profit margins and lower prices. Either one of these models could possibly net similar results. A small company that caters to a specific type of clientele can build up an aura of exclusivity around their product allowing them to charge a premium for access to their “one of a kind” items, while a large company that caters to the general population will most likely sell more merchandise overall but at a lower cost and possibly reduced quality and or functionality.
It seems that in business (and life) time is the one true master. Time is what determines the potential route that a business chooses go and the model that they will use. Time is the predominant force that dictates the production capacity that a business can achieve. On the flip-side of time is money. If enough money is spent you can potentially overcome the limitation of time. Money allows a business to break each task down into multiple concurrent processes. This can be achieved by hiring more staff or by using technology to automate certain aspects of the business’ production/supply chain. Eventually there will be a plateau where money cannot counteract the effect of time but if done properly, as the output of the business grows the prices can be lowered allowing it to break into untapped markets and possibly increase the demand and quantities sold of a potential product or service.
As a consumer I want the best but sometime the best is out of my price range. So I will go for the second best. If there is a situation where both a top tier and second tier item offer very similar features and are of similar quality then it all comes down to who can convince me that their wares are the best. Great marketing is what differentiates a feel good purchase from one of necessity and marketing is usually the reason one good product loses ground to another. If I’m convinced that your product will make me look, feel, smell better than your competitors product then I’m sold. The item may have no significant physical impact on your person but the mental and perceived impact can be significant.
The goal of this article is to give a general perspective on what the typical consumer looks for when shopping for a new product or service and also my idea on how certain factors affect business decisions when it comes to product marketing and distribution. These scenarios may not apply to every person or product but based on what I see there are three possible ways for a business to get the consumers money:
1. A business needs a stellar product or service offering that will compel the consumer to spend more money based on the perceived value of the product/service. This will be good for the business in that they can spend more time to develop and produce their products because even though it will cost the business more overall they will recoup their losses in the higher premiums that they will receive when their product is put on the market. In this case the consumer wins.
2. A business needs a way to reduce the time taken to manufacture/distribute their product or a way to reduce the expensive physical (human) overhead of their operation. This option usually produces a lower quality offering but has the potential to substantially increase the profits of the business. The consumer loses in this scenario due to the reduced quality of the product or service.
3. A business needs to create an emotional tie with the consumer through sales and marketing. This will allow the customer to overlook the shortcomings of the product in favor of its implied quality, and their and others perceptions of its worth. The consumer can either win or lose depending on the actual quality of the merchandise.
To a business, time is the enemy, and many companies will do whatever it takes to turn the most profit in the shortest amount of time. The approach that they choose to use is what makes it beneficial or disadvantageous to the consumer. How do you decide where your money is spent as a consumer and if applicable as a business owner? Please leave a comment below