FAQ: My margins are being squeezed. What should I do?
Answer: Do you remember the 1980s when some of us paid extortionate prices for a pair of Calvin Klein jeans? But how many of us would still do this today? That's not to say we wouldn't pay more for a brand, but there has to be perceived benefit. Today customers want value for money, although they may not be as focused on price as we think. In almost every case, there is an opportunity to beat our competitors by differentiating the way we meet their needs.
Even contractors, who are particularly concerned about pricing, can analyse and break down the market into smaller segments, which they can dominate. And with the expertise that this gives them, they can often find better ways of meeting clients' needs. The same applies to the building materials' and other construction markets. The crucial thing for us all is to make sure we understand what it is that our customers want.
If we don't keep an eye on the market drivers we won't see how changes in them will affect our markets. 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 are bought on price.