One of the courses which has remained with me since the time of my M.B.A. studies is the one on Economics. And from that course, one phrase I continue using to this day is: "all things being equal in all aspects, the factor which will differentiate between two identical products is the price".

Such a simple sentence but filled with important information for all involved in selling a product or a service.

One information is that in the absence of differentiation, the one aspect that will make a consumer lean toward one product over the other is the price. To better illustrate this, let's take two half-crates of tomatoes found in an unspecified farmers' market...

It is 9:00 a.m. and the two stands are next to each other. If the tomatoes are the same quality wise from one stand to the next, that you are equally well-attended and that all other considerations are identical, you will end up buying the tomatoes costing less.

Now, you might say:

- I know one of the sales people at one of the stand (reputation), the product is differentiated.

- In one of the two stands, they left the tomatoes on the branch (product differentiation), the product is different.

- One of the sales person comes and put the tomatoes basket in the trunk of your car (product differentiation true value added service initiative), both product are no longer identical.

And so on.

What is important to remember is that if you want to reduce your dependency on price (price elasticity), than differentiation is the best way to achieve this goal.

If you have questions or if you would like to find out how does this apply to your business, do not hesitate to contact us.

Looking forward to being part of your success.

Stéphane Elmaleh-Riel, MBA
President - Senior consultant

 

Email: info@groupe-principio.com