I have posted an article on another blog of mine which I believe is important to the FSBO seller.

“Market Rot” is a danger home sellers run into when overpricing a home for the real estate market. More does not mean more, when it come to pricing real estate more can mean less!!

Learn the relationship to the amount of interested buyers and market time in relationships to a homes price.

Avoid Market Rot- Price it Right.

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Do you remember the notion we used to have that multiple carriers selling the iPhone in the same territory seemed like a golden ticket to more options, lower prices and altogether more competitive deals for customers?

Well, forget it. Ain’t gonna happen. Not if the UK’s mobile market is anything to go by.

Vodafone UK has today announced the launch date of the iPhone on their network (it’s January 14, by the way) but once you’ve picked your way through their online pricing minefield, it’s hardly anything to write home about.

According to the Financial Times, Guy Laurence of Vodafone UK said the carrier has been busy preparing their network for the iPhone for the last twelve months;

We started preparing our network over a year ago so that iPhone customers will really feel the advantage of being with Vodafone. We will offer an outstanding iPhone experience wherever our customers live, work and travel, delivering speed and reliability – something our customers have told us they really value.

Yeah. We also value more competitive deals, Mr Laurence.

I did a very brief comparison of the three cheapest contract deals (not pay-as-you-go) offered by the three biggest operators in the UK: O2, Orange and Vodafone. Here’s what I found.

The cheapest contracts are all pretty lengthy –two years, in fact. That doesn’t sound unusual for those of you in America, I know, but here in the UK mobile contracts are often no longer than twelve months. Being locked-in for two long years is a ponderous proposition for many Brits who might be graduating (tentatively) to the exciting world of modern smartphones from their old Nokia 3310’s!

In addition, none of the carriers offers a competitive price for the latest model, the iPhone 3GS. The most affordable iPhones happen to be the elderly 2008 model. The stingy 8 gigabyte 2008 model, at that. So if you opt for a two year contract you’re getting a model that, in about six months (barely one quarter into the lifetime of your new contract) is going to be two models behind the latest and greatest from Apple. I’m just sayin’, is all.

Here’s how it breaks down, assuming the recession has hit you as hard as it hit everyone else and you’re looking to buy the most affordable iPhone package with one of the major UK network operators;

O2
For £34.26 ($55.22) a month you’ll get 600 free minutes of talk time and 500 free text messages. Data is unlimited. Assuming you never use more than the free talktime/SMS, this will cost you £822 ($1,324) over the course of the contract.

Orange
£29.36 ($47.32) each and every month gets you a measly 150 minutes of talktime and 250 text messages. The lifetime cost – £704.64, or 1,131.37 of your shiny American dollars.

Vodafone
For a few pennies more than O2, you can get last year’s low-end iPhone for £35 ($56.20) each month. For your money you’ll get 600 free minutes and unlimited text messages. The lifetime cost – £840, or $1,348.70.

Please don’t forget – and I can’t stress this enough – this is an unusually-long contract for the UK, and yet it’s last year’s phone.  Add to that the fact that, of course, no one ever stays within the allotted talktime and SMS quotas – everyone has a bill that costs the monthly fee plus additional talk time and messages. Frankly, it all adds up to quite an expensive deal, given the age and limited storage capacity of the model on offer.

I should add, too, that “unlimited” doesn’t actually mean “unlimited”. It means you’re allowed to consume as much data as the network provider deems “appropriate” for normal use. This tends to hover between 500 MB and 1 GB per month, which isn’t too bad unless you use your phone for watching YouTube videos eight hours a day. (Still, I take offense at the way network operators so casually use the word “unlimited” when it means nothing of the sort.) The trouble is that, if our providers start behaving like AT&T (s att), their idea of “acceptable data usage” is going to change, and not in our favor.

The 3GS, on the other hand, is astonishingly more expensive than the 3G with little appreciable difference between the providers in terms of handset costs and tariffs. I wonder if this is because of the already-steep up-front costs they’ve shouldered in order to offer Apple’s (s aapl) handsets in the first place. If that’s the case, perhaps I should be more disappointed in with Apple’s aggressive pricing policies that those of my nationwide cellular network operators. In any case, at this point in time, I see no compelling reason to move away from O2 at the end of my current contract.

Was I expecting too much in terms of competitive pricing? Are these prices fair, given the investments which must be made by operators to offer the iPhone ‘experience’? Or is this a shining example of unfettered network operator greed? Share your thoughts in the comments.

You are here: Home / Car News / Skoda Superb Estate UK pricing announcedSkoda Superb Estate UK pricing announced

December 17, 2009 by Matt Brogan

4 Comments

Skoda have today announced UK pricing for its highly anticipated Superb Estate models.

Ranging from £17,715 to £26,245 (AUD$32,175 to $47,670) the Superb Estate will represent very competitive value for money against category rivals offering class-leading legroom and cargo space (1,865 litres with seats down) and a long list of standard equipment.

Available in three trim levels the Superb Estate will also offer a choice of six engines, three petrol and three diesel, ranging from the entry-level 1.4 TSI (93kW) to the range-topping 3.6 V6 DSG 44 (194kW).

The estate will carry a premium over the hatch of between £1,050 and £1,200 depending on model variant.

Superb Estate goes on sale in the UK from 26 February 2010. Australian deliveries will follow closer to mid year.

One of the favored plans by many for reducing costs in health care is the catastrophic insurance plan with everything else paid for out of pocket. The idea behind this proposal is that the consumer will be able to negotiate lower prices. This is based upon a long history of marketing. One goes to the market and negotiates upon the price of, say, potatoes. Seller and buyer haggle. If the price is too high, the buyer has the option of looking elsewhere, the next stall or the next farm. One eventually finds a buyer and seller who agree upon the same price. However, that price may vary depending upon how desperate one is to buy or to sell.If the seller knows that he has an advantage, i.e., he is the only potato seller in town, he can charge a higher price and expect to get it. If the seller knows that all of the other crops in the area have failed, she can expect to earn more for her product.

Yet, when it comes to medicine, it is assumed that this marketing system will automatically reduce prices. The negotiations will somehow always favor the consumer. This seems like wishful thinking to me. Things may go as the out of pocket folks think, or maybe costs will actually go up. The second part in this equation is the seller. If we have a free market for consumers, we also have a free market for providers. When I analyze the potential transactions, I see the potential for costs to go up.

On the internet, everyone who posts is bright and knowledgeable. A quick visit to Google and all questions are answered. What happens in real life (RL for you gamers)? A parent with a sick child, someone who has just been told they have a cancer or someone just had a heart attack is told that they need an operation or a test. These people are rarely going to be internet addicts. They will not know the risks and benefits to the proposed plans, except as told to them by that provider. In that situation, how is the consumer going to negotiate well? In this kind of situation, insurance may actually hold down costs.

Of course, not every medical decision is quite that dramatic, just the really expensive ones. What about the day to day office visits? The routine care so many of us need. In much of the country, people live in areas that can support only one or two providers in a given specialty. There may be only one hospital in the immediate area. In even more rural areas, there may only be one physician for the entire town or village. In this scenario, how does the consumer negotiate those better prices?

Freed from price fixing by the insurance companies, might not providers find new ways to make money? Is it possible that consumers might be willing to pay more for some items if their values were determined by market forces? Let us take labor epidurals as an example. Insurance companies in my area have cut fees for epidurals quite a bit over the years. At many hospitals the economics of labor epidurals are negative for providers. They continue to be provided because of political pressure or the feeling on the part of some that there is an ethical obligation. What happens if we now make this service fee a negotiated one? How much will people be willing to pay once they are in pain? (At least 20% of women on our labor floor come in saying they do not want or plan on having an epidural. About 90% change their mind. So, I do not mean for this to sound cruel. Some women will feel that the price offered by the provider will be too high. They will opt to go without. History suggests many will change their mind. They will end up paying that higher price.)

Lastly, let us get down into the weeds a bit. Just what does out of pocket mean? Providers already know what happens with plastic surgery cases. If you do not get the money up front, you are not going to get it. They will want payment up front. Not unusual for a service you cannot take back as opposed to something like a car or a TV. Are people going to hand over a wad of bills? Some, but most will end up paying the way we always do, with credit cards. This incurs interest costs. Will this offset savings? How do we set our catastrophic limits? Setting it too low or too high has downsides also.

When I weigh out all of these possibilities, I do not see it as a given that out of pocket plus catastrophic insurance guarantees savings. It might work, it seems like it should probably work, I just don’t know. Maybe we should try it in a few states before committing to it as our national plan.

While reading SamsMojo earlier this week I was surprised to learn the prices of the top 10 selling iphone apps for 2009. In fact, the price for the top seller was more than 10 times what I expected at $99 – The TomTom navigator app. Not the $3 we’d get as a response if we asked a random sample of people.

Sure, it’s a high price as far as iphone apps go, but it much cheaper than a $500 TomTom. The point for startup is this. There is no such thing as expensive. There is only expensive in relation to the set of relevant substitutes. And when we are pricing our brand or startup all pricing decision need to be made relative to the alternatives.

As one of my favorite Yuletide songs proclaims, “It’s beginning to look a lot like Christmas.” It’s hard to escape the commercial manifestations of the holidays – aggressive advertisements, sparkling shops and tempting trinkets – all screaming at us to “Buy, Buy, Buy!”

Many people who would normally jump wholeheartedly into the seasonal spending spree can only look on from the sidelines as spectators, as their bank accounts reflect the current economic crunch. Other persons have decided to throw caution to the wind by declaring that it’s business as usual this year. Armed with partner draws, overseas remittances, or credit cards dangerously close to their limits, some shoppers are living on the edge by spending more than they can really afford.

How can you balance your desire to participate in the holiday festivities, if you’re strapped for cash and your financial reality dictates frugality at this time?

If this is currently your situation, which for many of us unfortuntely it is, you need something that can help make more profit. Whichever type of business you are involved in, PRESSfish uses digital marketing solutions in an effort to trim costs, save time, and boost customer interaction.

Fortunately, you can sign up at http://pressfish.com for a free trial, which is capable of lasting a lifetime if you have 200 total subscribers and 500 sending limit per month. Otherwise, it is a low cost to inevitably increase traffic and clients which will ultimately increase profit.

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Pay-as-you-go options

Yes, you can also pay only when you actually send a campaign. Pre-purchase a block of “Email Credits” that work like stamps. Credits rollover from month to month, and don’t expire.

Canada: Water, Water Everywhere – But Did You Get Permission To Take It?

15 December 2009

Fraser Milner Casgrain LLP / Article by Jan-Martin LeBlanc and Pierre Langlois

Québec had a wet summer this past year. While washing out many picnics, the steady rains also replenished our ground and surface water reserves. Although Québec is blessed with abundant water resources, there is wide consensus on the necessity to protect such a critical resource. The Québec legislature has adopted over the past few months new water legislation which will potentially have an impact on businesses. The following summarizes the new regulatory scheme introduced by the Water Act and the Regulation respecting the declaration of water withdrawals.

A New Water Regulatory Regime

The unanimously adopted Act to affirm the collective nature of water resources and provide for increased water resources protection, or Water Act, introduces several mechanisms for protecting and managing water resources. The Québec National Assembly adopted the law June 11, 2009, but had not yet announced the law’s effective date at the time of writing. The Act’s highlights include:

• civil recourse for the Attorney General to order reparation of any damages to water resources,
• a new regime for authorizing water withdrawals,
• acknowledgment that water is a collective resource and part of Québec’s common heritage,
• water governance rules based on integrated and concerted management of designated hydrographical units,
• a new water knowledge office, and
• prohibitions against transferring water outside of Québec that only the government may waive and only for public interest after public consultation.

The Act’s broad civil recourse provisions will have a substantial impact on potential civil liability of companies whose activities are likely to alter the quality of surface or ground water. Basically, in addition to any penal environmental recourse, the Attorney General may commence proceedings for repairs to any water damage caused by or through a person’s fault or illegal act. Under the new law, a company that causes damage to water is liable regardless of intention, carelessness or negligence. Rather, the simple fact that the company caused the damage is enough to establish liability. The Act’s no-fault regime departs from the general civil liability scheme that requires proof of fault. Moreover, unlike cases of environmental regulatory violations, offenders will not be able to raise a due diligence defense to escape liability.

All kinds of water damage are subject to civil recourse under the Act’s broad language. Damage covered includes any degradation of water resources’ physical, chemical, or biological features or ecological functions as well as change in quantity. Offenders may be ordered to restore the resources to their original state, repair through compensatory measures, or pay a lump sum as compensation.

In contrast to other recourse under the civil code that requires complaints be lodged within three years, the new water law only requires the Minister to take action within ten years of the date when the Minister first knew of the damages.

So, to avoid liability under these new provisions, companies will need to pay close attention to the consequences their water activities cause, avoid altering the quantity, and keep from damaging the quality of surface and ground water.

Read the whole article

Digital Book World speakers share eBook strategies and models

Back in September, Macmillan CEO John Sargent reported that pirated versions of 90% of Macmillan’s frontlist titles could be found online, stirring much conversation about what, if anything, the book publishing industry can do about piracy.

Timing of eBook releases, pricing and digital rights management are all topics that will be discussed at Digital Book World. The new conference on publishing and digital change will take place January 26-27, 2010 at the Sheraton Hotel and Towers in New York City, and will offer consumer book publishers information and insights to enable them to craft strategies for adapting to, and embracing, digital change.

On the first day of Digital Book World, Brian Napack, President of Macmillan, will deliver a call to arms for publishers to fight what Macmillan sees as a mortal threat: piracy in the eBook space. In Digital Book Piracy: It’s Here. Let’s Deal with It, Napack will describe Macmillan’s view of what each publisher can do and what the industry should do to fight a problem, which, in his company’s view, could threaten the underpinnings of publishing as a commercial enterprise.

“There’s a big difference of opinion among digital thinkers about the impact of piracy and what can be done about it, but there’s not a lot of dispute in the big publishing houses that it is a threat to the core model of selling quality content,” says Mike Shatzkin, CEO of The Idea Logical Company and Digital Book World’s Conference Chair. “We’re delighted that Brian is willing to address this question head-on.”

“One of the new models being entertained by a number of fledgling enterprises and entrepreneurs is an ‘eBooks first’ strategy,” adds Shatzkin. “We recruited Raelene Gorlinsky to come talk about Ellora’s Cave, because they launched that strategy ten years ago and have been growing ever since.”

Gorlinsky, the Publisher at Ellora’s Cave, has plenty of experience in the eBook world. She will do a Q&A with Shatzkin on the second day of the conference reviewing the history of the “eBook first” company. During Ellora’s Cave: A Case History of a Different Publishing Model, Gorlinsky will describe Ellora’s Cave’s beginnings publishing PDFs for romance readers. She’ll share some of their very unusual practices such as delaying release of print editions to allow plenty of time for selling the eBook first; printing their books in their warehouse on demand; and paying royalty rates on a scale and frequency that would make conventional publishers squirm.

Join your peers at Digital Book World on January 26-27, 2010 at the Sheraton New York Hotel & Towers in New York City.

Register Today!

Ubisoft are starting to slowly give up details on the new Assassins Creed 2 DLC.

The Battle of Forli will be released in late January (no solid release date as of yet) and will give players a further 6 missions to playthrough.
Ezio will be defending the Orsi brothers whilst trying to retain a piece of Eden.
they will also be using the rather underutilised Flying Machine.
The Battle for Forli will be roughly 1GB in size and is priced at 320 MSP which is a fantastic price for such a large piece of content.

The Bonfire of the Vanities will expand on Florence  and cover the evens surrounding Savonarola,this new area of Florence will give players 10 new missions to work through as well as a new move called  “spring jump”.
This piece of DLC will set you back just 400MSP and is also around 1GB in size.

So thats 2GB worth of DLC for a total of 720MSP and provides 16 missions,a new move and expands on the story.

Moxie Mezcal Interview

I’m going on record as saying I hate hardcovers. I mean, sure there’s probably some archival value to it, and maybe you need a sturdier binding for something like the Oxford English Dictionary, but other than it – there’s no reason you’re making me pay $30 for the fucking hardcover for new releases. Just give me the cheap paperback and the ebook right away, you godless-fucking-swine.

There is more awareness in this interview than any others I’ve seen with writers lately. And it’s infected throughout with great stuff I could quote. Go read.

Moxie Mezcal website
And read her Guerilla Fiction Manifesto there!

Previously here:

Edgar Allan Poe Knew The Score In The 1800s!
What Publishing Fears: The John Galt Maneuver
Writing Quote Of The Year: Paul Witcover
She Who Measures
Writer Peter Watts Beaten, Arrested
The Invisibles
Book Publishing Thinks It’s A Darwin Exception!
eGether Is The Future Of Book Marketing
Writer Eddie Wright: Broken Bulbs
Quote: Writer Moriah Jovan
Quote Of The Day: Kathy Sierra
How It All Works
YOUR Creation, YOUR Work, YOUR Art
For Writers Only
Twilight Of The Suit System
Writer Declan Burke: A Sad Post
Quote Of The Day: Jenn Topper
And Just Who Are You?
The D In DIY
Think And Grow … Um, What?
DIY Does Not Mean Do It FREE
Writers: DIY Or Die!
Curation: A Dead Idea Of Dead Thinking
Quote Of The Day: Guy LeCharles Gonzalez
Because.
Writer Jason Pinter On What Matters
Keeper Quotes
Why Read?
The Amanda Fucking Palmer Effect
Who Stole The Audience?
Prominence Versus Influence
Pay The Artist!
TV’s Bonanza: With Charles Dickens
A Contrast In Scale
Advice Too Good To Lose

A friend of mine emailed me a link to this, and it is informative: overall, Chicago and Suburbs ranks fifth (5rd) overall out of forty (40) major metropolitan areas in the U.S. Chicago real estate brags the third most days on the market, and the third most price reductions. Not a good spot to be on this list.

As the subtitle of the article states:  “Properties in these cities stay on the market longest, and sell for less than asking price.”

Get the full article and table here. The list is interactive: you can sort by five different table headings.

When the value to the customer is not clear or hard to quantify it is difficult to go to market with the right price. Take the case of new market entry, while your customers in old  markets may connect well with your value message it is not the case in new markets where the  customers may  not have heard of your brands.

The problem is complicated when the new market is made up of low value, low willingness to pay  customers as in the case of Bottom of the Pyramid. Customers truly lack the resources and wherewithal to spend a whole lot on your products but do stand to get value from your products.

Introducing your product versions from your established and affluent markets into these emerging low WTP markets is fraught with perils. Wrong price will not only result in losing profits but you losing out completely to the local and regional brands.

I wrote about using relative price when the value message is not clear to your customers. The idea is to position your product and price it to capture a share of the budget spend in the particular area. A similar idea, with a variation, would work for bottom of the pyramid as well. Understand the total spend of the customer and what they spend on absolute essentials – then design and deliver a version at a price that is relative to these essentials and profitable to you.

Take the case of P&G, which is going after markets like villages in India and China. Here is what their approach is:

Products, too, have to be adjusted. Procter & Gamble has had to break down products like shampoos and soaps into smaller and less expensive sizes. In these countries, for instance, P.& G. makes sure that a small package of shampoo, enough for one or two uses, does not cost more than the price of an egg.

It is not enough that you compare your price against other direct substitutes and alternatives. You need to survey the whole range of customer spend and understand that you are competing for a share of the customer’s tiny wallet. If you did not understand your shampoo will be competing against eggs you will end up introducing a package at a price that is way beyond the reach of most customers. Note that this is not about cutting your price to meet the low WTP but versioning your product so that it is both priced attractively and can be delivered at a cost that is profitable to you.

Success at the bottom of the pyramid does not mean low prices – it is still delivering great value at the right price.

Q. I want to move to a bigger house but every agent I talk to tells me I won’t get what I want. It’s not that I “want” it, I need it be able to make a move.

A. If you’re serious about selling, better to price where the market is selling rather than ‘chase the market down’, by continuing to reduce your price. This usually results in a longer time on the market plus a perception by buyers that there is something ‘wrong’ with your house because it has been on the market so long.

That said, you can ask whatever you want for your home. The rub comes after you’ve found a willing and able buyer ready to pay your price because your home needs to appraise for the selling price. Appraisers will use the very same comparable homes that the agents have shown you.

Remember, the beauty of this market is that although you’ll take a hit on your home, you’ll also be paying a lower price for your new home!

Misconception #5 – Lower Your Prices and Make it Up on Volume

(Read time approx. 3 minutes.)

This is the fifth misconception in a series of six. The concepts being discussed here will likely be counter to your beliefs. The comments left on the previous posts are quite interesting so you may want to go back and read them. Click HERE to go back and begin with the first post related to this series.

Possibly one of the greatest travesties to befall the independent garden center as an industry is the fallacy that if you offer lower prices you will “make it up on volume”.

This is what I  call Fifth Grade Economics. The general level of knowledge about economics in our industry was learned in fifth grade social studies class. In my fifth grade class Mrs. Woods taught us about supply and demand, and how if you lowered the price you would “make it up on volume”. Unfortunately this same macro-economic principle has been perpetuated in higher education and has not been balanced with understanding of the micro-economic application in an independent garden center serving niche demographic and psycho-graphic customers.

It may be true that more units of garden center products and plants are sold to US consumers through the combined efforts of mass merchandise chains and independent garden centers. However, I  do not see any economic benefit of that additional volume to more than a handful of folks who are directly involved in our industry. The downward price pressure of commoditization at wholesale and retail levels is actually depriving our industry supply chain of the margin dollars necessary for continuing a healthy business. Radical change beyond the application of LEAN processes is occurring as the effect of a poor economy forces weaker companies to exit the competitive environment. For now, their volume is being redistributed among the last men standing. Yes, this comes with free enterprise, however it is accelerated by a lack of understanding and incorrect application of this basic supply-demand economic distribution model.

The “Make it up on Volume” trick should be reserved for items sold in high volume through mass market retail stores and that is where it began in our industry. In the earlier days of the independent garden center business some companies in reasonable proximity to larger population centers were able to trade price for volume and come out fairly well off. Remember that some of their brethren were equally as successful promoting a value-added business model and earning even more money during those days preceding the discount format mass merchants entering the garden center business. Now the DNA of those companies demands that they exploit more commodities to drive yet more traffic through their stores.

The “Make it up on Volume” folks that have made it this far are now ensnared in a deadly trap where operating margins are lowering as the costs of doing business rise. To continue to compete on price they must advertise low prices even more aggressively to draw enough able-paying customers past the myriad other mass merchants as well as value-added independent garden centers just to pay their bills. Where does this low price/high volume philosophy lead? Just this week I read that an 82 year old owner of a 90 million dollar garden center chain famous for selling on low price/high volume doesn’t think he can sell his business for more than the value of the real estate and equipment.

Price Elasticity of Demand is the economic principle we’re talking about. It is true that sales volume of some items increases while more consumers are attracted to purchase them as prices drop. Customers who are attracted by lower prices may also use the product more frequently and in greater quantity over a period of time.

For example, Kroger recently advertised gallon jugs of milk for $1.75 in a local market. While Walmart has been aggressively advertising the savings they offer on the total shopping basket everyone knows that the price of milk is  about $3.25 to $3.50 and Kroger wins a shopping trip from nearly everyone in the market. Those milk-buying shoppers include the die-hard loyal Kroger shopper as well as many Walmart low price shopper regulars who intend to “cherry-pick” but inevitably get caught up in other deals that are more lucrative to Kroger. These folks stock-up on milk to save the maximum amount they think they can use before the milk they purchase would spoil. They pour more milk until it is gone, then most of them return to their regular shopping pattern or the next sale-price induced one.

Most garden centers have adjusted to selling fewer Known Price items as discounters and big-box chains have created commodities out of Miracle Gro, Proven Winners, flats of annuals, cell packs of annuals, gallon perennials, etc. (This is NOT to imply that independent garden centers should not sell these items at all.) As more items are commoditized independent retailers have failed to adjust tactics and have no solid game plan on how to  hold onto the margin dollars they need to earn on the high quantity items they sell. Commoditization is fueled by suppliers who offer no control of their distribution to protect their retail outlets.

When 4″ specialty annuals and 5″ Poinsettia are heavily advertised at $.99 during prime buying season by two major mass merchants in many US markets this year the rapid commoditization phase of the Price Elasticity of Demand Game is officially on. Someone – maybe everyone is about to get hurt!

The Price Elasticity of Demand Game

An independent who chooses to remain relevant and competitive in the same market as discount merchants has to play the Price Elasticity of Demand Game the way it is intended. This game has no favorite. In this game the challenger has entered the low price/high volume arena and the incumbent value-added retailer must resist the pull to join them or join the race to the bottom – end of game.  The other side of this game table is the Inelastic side and that is where they must the value-added retailer must choose to sit, but not just wait out the competition if they wish to continue as a viable provider to the customers who choose to purchase their added-value offer. They must devise new tactics.

New Belief #5 – You must do the hard work to add value and differentiate your company to earn the margin dollars you need to sustain your business.

Product Differentiation

On the value-added side of the game table the rules are the same but the game pieces are different. The incumbent (high/value independent) must play with game pieces (products) of Unknown Price, leaving game pieces of Known Price and relatively low operating margin to the challenger.The basic idea is to create in-elasticity by offering highly desired and highly valued products at prices that allow a high operating margin.This is also known as Product Differentiation.

Choosing Supply Chain Partners

Executing this strategy is not easy in a marketplace where person charged with selecting products to sell are matched with suppliers who ignore or are unable to meet the strategic need of their retail partner to offer differentiated products and a margin of protected from high volume/low price competition. I can think of no such product supplier to our industry supply chain other than in the gift categories. Vera Bradley for example sells through a limited number of authorized retailers and strictly enforces discounting within their legal limits. Instead, many garden center suppliers provide exclusive product opportunities and other benefits to their mass retail distribution partners. And those that do partner with independent value-added retailers do not limit distribution within a market, provide suggested retail pricing, or invoke discounting parameters.  Of course one of the reasons they don’t offer these controlled distribution benefits is that most independent garden centers don’t understand them and resist the notion of being restricted by these types of vendor rules. (In other words, we have met the enemy and he is __.)

Environment Differentiation

To the degree products are differentiated by quality of ingredients, performance and design the physical environment in which they are offered to consumers must also be differentiated. The value-added side of this game table looks different to the consumer. From colors to quality of display materials to spacious room for customers the atmosphere is more inviting and comfortable. Meanwhile others are drawn to choose to spend less for less in the low price/high volume retail environment that is often more crowded and less attractively decorated.

The cost of differentiation has been a controlling factor in the past, however low price/high volume providers have been using their economies of scale and design to break the barrier (visit an updated McDonald’s restaurant) and increase margins on commodities such as coffee. Another nemesis of low price/high volume stores in the past has been cleanliness. This has been given much needed attention in mass merchant stores. It is getting to be even more expensive and difficult and even more important to differentiate on the basis of atmosphere.

Service Differentiation

Providing a value-added experience through offering services whether included or optional and additional create in-elasticity or differentiation. Mass merchants have responded to the service edge long possessed by independent garden centers with no-questions-asked guarantees, certified specialists, in-store vendor merchandising, and even plant installation services in some areas. The most viable level of differentiation by service is that of long-term personal relationship and connection between the salesperson and the consumer.

Total Perceived Value

The customer perceived TOTAL VALUE TRIANGLE -  Product, Store Environment, and Service

Achieving a winning level of total value perception by the consumer requires exceeding the minimum expected level of service and provide noticeable difference in all three value areas.

The role of each type of retailer is to represent the total value they offer as completely as possible and in context of how the consumer perceives the value they receive from the products, environment, and services. This is done by product and store design, marketing messages, and ultimately the repeat business and word of mouth from their consumers.

Who Will Win?

We are only concerned with helping the independent value-added retailer succeed, and the only way we know to successfully do that is to differentiate in all three areas of the total value triangle. Those who choose to fully engage in providing the most highly differentiated value have a place at the table where stakes are high and clear separation from mass retailers is a must.

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