That there Internet is a powerful tool in the hands of your potential customers. You probably vary the price of your product over time – lowering it when you want to boost sales or when you have a new version that you are getting ready to introduce. Well guess what, your customers have figured out what you are doing and they are using the Internet to tell everyone else about it. What’s a product manager to do?
How Did Your Customers Get So Smart?
Things didn’t always used to this way. Once upon a time Product Managers could charge different prices to different customers whenever they wanted to. We had special lower prices for our best customers and we could use discounted prices to drive our customers to purchase from us using the channels that we wanted them to use.
Oops, those days are over. Now that the Internet has arrived with a vengeance, those days are now officially gone. Our customers have finally figured out how to use that Internet thing and they are using it with a vengeance to find out what our lowest prices are no matter where they are.
Our customers are no longer acting alone – now they travel in packs. Working together, people who review our products, consultants, and previous buyers are all adding what they know about our product pricing to the online discussion and this is the information that is being used by bargain shoppers worldwide.
Add to this mix the powerful new Internet tools that have become available over the past few years and you’ve got Product Managers on the run. Search engines are able to quickly and efficiently find any price that we’ve ever posted online while so called “search-bots” are now scouring the Web 24×7 looking for the best available product price no matter where we’ve hidden it.
This has all contributed to a new customer mind-set. They have now come to believe that with a little bit of effort they should always be able to find a way to purchase our products at the lowest possible price. Clearly, we Product Managers need to do something about this situation.
How Product Managers Can Battle Bargain Hunters
Yes, the world has changed. However, that doesn’t mean that product managers need to throw in the towel. Instead, we simply need to acknowledge the new world order and we need to start to make some to changes to how we both price our products and how we communicate those prices to our customers.
Here are four steps that Product Managers need to take in order to tackle the problem of Internet fueled bargain hunters:
- Do A Better Job Of Online Listening: Before you can solve a problem, you first need to understand what that problem is. You can start to understand what information your bargain shoppers have on your pricing by taking the time to go online and find out what they know. Once you know how your customers are getting those low prices (perhaps by combining various discounts), you can take steps to change your discounting strategy and rules to shut some of these doors.
- Love Your Bargain Hunters: Although all Product Managers like to sell their products at the highest price possible, sometimes we need to clear out our inventories and that’s when we learn to love our bargain hunters. What we need to do is start to set limits on just how good of a bargain (or for how long) we’re willing to allow bargain hunters to get a really great deal on our product.
- Don’t Become A Commodity: If the product that you are selling looks like other products that your potential customers can buy, then you are forcing them to make their buying decision based on price. Don’t do this. Instead, package or bundle your product in unique ways in different channels in order to make it stand out both from both the competition and from the other channels that you are offering the product through.
- Control Who Sells What & Where: When we strike partnerships with other vendors, they can often turn around and sell our products to our potential customers. If we’re not careful, they may end up selling it at a lower price than we’re offering it. That’s why setting a minimum resell price as a part of our agreement with a vendor needs to be a critical part of any such deal.
What All Of This Means For You
Product Managers know that the Internet is a powerful tool – most of us use it every day. However, our potential customers have discovered it also and they are using it to discover how we price our products.
Product managers need to accept that this is the new way of the world and react to it. There are different ways to handle all of the pricing information that customers are getting from the Internet. Some include monitoring what your customers are saying about your product’s prices, catering to some of your bargain hunter customers, making sure that your product is not seen as a commodity, and making sure that you control your sales network.
You can’t fight the power of the Internet. Instead Product Managers need to find ways to embrace it and understand that their customers are going to have more information on how a product is priced than they have ever had before. Using this knowledge to your advantage will allow you to sell even more of your product!
Question For You: If too much pricing information about your product gets out onto the Internet, do you think that you should change your pricing strategy?
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What We’ll Be Talking About Next Time
Dang it! This was supposed to be a story about a product success, not a product failure. Pure Digital created the low-end highly portable video camera market a few years back and then got bought out for a half a billion U.S. dollars by the networking giant Cisco. Cisco is stuffed with smart, bright product managers and they should have been able to boost this successful product into outer space. But they didn’t and now the Flip video camera is going away, what happened?