There are two types of competitive price-guarantees:
- the competitive price match guarantee
- the competitive price beat guarantee
Why businesses price match competitors
Simply put, businesses price match competitors to either keep existing customers of to gain new customers.
However, an enviable Unique Selling Proposition (USP) business tends to attract new customers and retain existing customers without engaging in price matching as there is nothing to compare with. Consumers would probably be quite disappointed in seeking a price match from a USP business.
Why consumers seek to price match
Consumers may seek to price match for a variety of reasons such as:
- It's less of a hassle to stay with the existing suppler than to move to a new supplier e.g. the hassle of moving a mortgage from one bank to another.
- The same product or service is supplied by many suppliers and the consumer simply wants the best price with the least effort e.g. purchasing a particular smartphone model. As there is a range highly competitive smart phone suppliers from which to choose, many consumers treat such a product as merely a commodity to be sourced at the absolute lowest price. Why pay $349.99 from one supplier when you can get it for $299.00 from another.
- A consumer's business has rapidly grown and seeks a discount for recurring higher supply volumes e.g. a rapidly growing house painting business owner has shopped around for discounted paint supply rates and wants a price match to stay with his current paint supplier.
Why businesses price beat competitors
Businesses that price beat competitors do so for a variety of reasons such as:
- An aggressive start-up business that seeks to gain stellar growth momentum.
- A well-established and thriving business that seeks to gain market share from its larger, less nimble competitors.
- A business that has a superior productivity advantage over its competitors which means it can pass on productivity saving to consumers.
Consumers may seek to price beat for a variety of reasons such as:
- A consumer has been contacted by a competitor supplier offering better rates. The consumer then approaches its current supplier to price match the competitor's discounted rates.
- The consumer is on a cost cutting exercise to seek out the lowest price through price beating across a number of suppliers.
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