My margins are being squeezed. What should I do?

Answer: We all want value for money. But we may not be as focused on price as we think. Many of us pay more for a brand, if there is a perceived benefit. There is usually an opportunity to beat competitors by differentiating the way we meet customers' needs.

Even contractors can analyse the market and then break it down into smaller segments, which they can dominate. With the expertise this gives them, they can often find even better ways of meeting clients' needs. The same applies to all markets. The crucial thing for us all is to make sure we understand what it is that our customers want and include it.

Most new products begin at the top of the curve, when the manufacturer can charge more because it is new and different. But as products reach maturity and more competitors come into the market prices fall as products are copied. Unfortunately many building and engineering products and services fall into this category. Look at bricks!

If we don't adapt or differentiate our offering, then we too will slip down the commodity slide - as the perceived value of the brand diminishes, we enter a commodity market, where goods and services really are bought on price.

Companies at the bottom of the slide can still survive but they have to reinvent their offering by getting closer to the end users and finding a new way of meeting their needs. Often this involves a broader offering and a new distribution channel that is shorter.

back to top | faqs | home | free downloads