My $0.02 & slightly OT, but food for thought about price:
In my last lifetime I worked as a mechanical engineer. One achievement
I was particularly proud of was being the head engineer over a frangible
bullet production line (frangible copper alloy bullets for firing ranges
to prevent ricochet and lead/toxin problems). "My" bullet was by far
the best frangible bullet out there; it's pattern at 20 yards (handgun)
was less than half the size of anyone else's. I ran a tight ship, and
we were the best. There was, however, an escalating patent race on the
method of production. The company I worked for bought the process from
a research firm; one of its employees quit working for them and filed
his own patent. So we one-upped his patent; he one-upped our patent
(patent's are nearly worthless by the way, but I digress...). There was
no legal way to stop him from production. I was told that he then
basically bought some equipment and began making the bullets out of his
garage at a price we couldn't touch. The head of our North American
Sales team angrily said that this guy "ruined the market" for all the
frangible ammunition makers. So, this guy with a couple pieces of
equipment in his garage put us, a multi million per year international
company, out of production on this product line. We dropped the product
because the profit margin was too slim. The other guy was willing to
roll back his sleeves and put the wife and kids to work. And made it
work.
Jason
Peter R. wrote:
Mark,
While it is true that many suppliers created their own problems, both
Walmart & Home Depot do in fact beat up their suppliers. Extra fees.
Delivery hassles. Invoicing issues. It is a catch-22: everyone wants
to sell at Walmart to get at the eyeballs, but at what cost? Why do
you think toy makers have tried to go around Walmart?
If you want to take lessons from them:
- learn from their lousy employee relations (turnover rates as high as
300%)
- be impressed with their automation
- match their execution
- acquire its focus and strategy
- have a similar corporate story
Wal-Mart conquered common retailing and business issues through a
relentless emphasis on cost-control and execution.
“By focusing constantly on trying to become more operationally
efficient, Wal-Mart sets itself apart from its competitors,” writes
Bergdahl. “Wal-Mart isn’t successful because of its strategies so much
as because of its lockstep tactical execution of those strategies.”
[from Michael Bergdahl, author of /What I Learned From Sam Walton: How
to Compete and Thrive in a Wal-Mart World]/
But remember that you are not selling a commodity like Walmart.
There are many more lessons on Walmart here
(http://www.rad-info.net/newsletters/walmart16.htm) and in numerous
books, including Price Wars: A Strategy Guide to Winning the Battle
for the Customer by Thomas J. Winninger
"How can anyone compete against Wal-Mart? As Bergdahl explains in an
early chapter, price is not the answer. Because of Wal-Mart’s
efficiencies and buying power, retailers can often buy products at
Wal-Mart for less than they can get it from a distributor. The key to
success involves finding a niche, and providing value-added service,
based on intimate customer knowledge. Wal-Mart’s only Achilles heel is
its inability to address specific customer requirements, although that
weakness is masked by the “10-foot rule” and similar policies. Each
associate is required to help, or at least smile at customers, if they
are within a 10-foot radius."
That's my 25 cents anyway.
Regards,
Peter Radizeski
RAD-INFO, Inc.
marketingideaguy.com
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