16 replies
I've heard that from lots and lots of salespeople and small business owners.They say it because they think that price is their only advantage.

The thought also protects them from feeling the need to learn about marketing...or selling...or positioning their offers....

It shields them from personal responsibility for their own success.

Let's take a commodity. A 12 ounce piece of steak.

In one restaurant, this is $20. In another restaurant it's $80. Why?

The same piece of meat, bought from the same meat wholesaler....cooked in exactly the same way.... Why the difference in price...that people eagerly pay?

Because of everything else involved in the transaction.

Sure, they are paying for a meal...but what else?
1) The restaurants's reputation
2) The attentiveness of the staff
3) The attractiveness of the settings on the table,
4) Who else eats at that same restaurant?
5) The signage, parking, safety of the area.
6) How clean and attractive are the resterooms?
7) What else do the serve?
8) Is here a theme that's attractive?
9) The hours open
10) The reviews on Facebook and Amazon.
11) What publicity has the restaurant created?
12) Who recommended the restaurant to you?

I could go on, but you get the picture.

I sell vacuum cleaners at retail. Yesterday a couple drove 50 miles to see me, to buy a vacuum cleaner for $800. One that they knew they could buy in their own town for $200 less. A real commodity.

Why did they come to my store? I asked, and they told me.

They went online and read the reviews for every vacuum cleaner store within 50 miles.
I had the best reputation.
And I offered several services for free, if they bought from me. Services with a high perceived value, but low cost to me.
My store is clean and I have a large inventory of machines on the floor. Something unusual in this business.

And yet, when they left, they had the same vacuum cleaner they could have bought elsewhere for less. A true commodity.

So...what can be learned by all this? If you think you sell a commodity, you are wrong...because everything else they get, service, delivery, speed, knowledge of your business, reputation, and your marketing are all separate from the thing you see as a commodity. And all of these things matter.

A friend of mine sold mattresses. I saw one of his ads. I asked him "Do you deliver for free and take their old mattress?" He said "Of course we do"

I said "Why isn't that in your ad?"

He said "people don't care about that. They only care about low prices".

I felt very sorry for my friend, because he was now shielded from the reality that some customers care quite a lot. And price shoppers are only about 20% of any market.

So he was spending real money to attract the least profitable, smallest market segment....virtually guaranteeing that he would go out of business. And he did.

I hope this helps someone.
#commodity #sell
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  • Profile picture of the author IGotMine
    For a couple years in the "90s" I lived in Wausau, WI. There was a gas station/c-store about two blocks from my house. There was an identical brand store about two miles away. I would drive right by the nearer location and go to the other store.

    Identical products, identical prices.

    The store near my home was unkempt. The staff was downright surly.

    The farther store was clean, I was always greeted and thanked, they gave free lollypops to my children.

    I was back to visit a couple of years after I moved away and the "friendly" store was thriving and had added on. The other store was boarded up.
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  • Profile picture of the author max5ty
    How do you explain a Walmart that outsells everybody?
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    • Profile picture of the author StevenTylerPjs
      I know people that avoid Wal-marts like the plague. They much prefer Target, even if the prices are higher. The stores are cleaner and the staff is friendlier (my area seems to be that way at least).

      I'm curious to hear others take on this though too. Walmarts do seem to take a lot of business from others due to being able to beat them on price, generally speaking. I hadn't heard the 20% number Claude mentioned above. Very interesting. I would have thought it would be higher.
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    • Profile picture of the author savidge4
      Originally Posted by max5ty View Post

      How do you explain a Walmart that outsells everybody?
      The not so obvious answer is not price, but CHOICE. Look at the physical size of a Walmart vs any other local store. I know where I live the Grocery dept alone is 2X that of any other store.

      An example... I sell SPAM on eBay... my local store has Original SPAM and that's it. Walmart on the other hand has 5 or 6 varieties from BBQ to Hot & Spicy. If people only knew they could goto Walmart and buy it them selves instead of paying me $12.00 plus shipping to deliver it LOL
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      • Profile picture of the author DABK
        I think most of the people who buy from you might still go to you even if they knew: habit and sobism and convenience and dislike if the unknown also come into play.

        The first and last ones are also favoring WallMart. In my area Target has started to sell food too, which WalMart has been doing for a long time. You can go to either and buy your groceries, pans, pants, notebooks... At WalMart you can also buy car things plus computers plus bikes and tents...

        QUOTE=savidge4;11579284]The not so obvious answer is not price, but CHOICE. Look at the physical size of a Walmart vs any other local store. I know where I live the Grocery dept alone is 2X that of other store.

        An example... I sell SPAM on eBay... my local store has Original SPAM and that's it. Walmart on the other hand has 5 or 6 varieties from BBQ to Hot & Spicy. If people only knew they could goto Walmart and buy it them selves instead of paying me $12.00 plus shipping to deliver it LOL[/QUOTE]
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        • Profile picture of the author Claude Whitacre
          Originally Posted by DABK View Post

          I think most of the people who buy from you might still go to you even if they knew: habit and sobism and convenience and dislike if the unknown also come into play.
          You are right about habit.

          We still have a healthy business. But our customer base is aging. Almost none of our customers are under 45 years old. And almost nobody in our business is under 55 years old. Most are at retirement age.

          Why? Amazon is getting the younger buyer, and they should. To me, shopping on Amazon is smart shopping.
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    • Profile picture of the author Claude Whitacre
      Originally Posted by max5ty View Post

      How do you explain a Walmart that outsells everybody?
      That's a smart question...and I have the answer.

      Walmart doesn't outsell everyone on some individual items.

      But here is what they have..

      A vast selection....Vast.

      Walmarts are well stocked, clean, open around the clock, and the employees are well trained.

      If you are going to get groceries there, it just makes sense to buy everything else there as well, assuming they have it in stock.

      And yes, their prices are very low. But you can find lower prices on Amazon.

      And what does Amazon have?

      Limitless selection. Prices brought down by enormous amounts of competition (on Amazon). The convenience of no travel and fast shipping.And...returns without hassle.

      So why do people buy more vacuums (based on dollar volume) from me than from our local Walmart?

      In that particular niche, I have a better selection. And....I provide services you cannot get at Walmart, that customers want.

      And...Walmart caters to price shoppers. That's their strength. The products I sell, you cannot get at Walmart.

      Remember, only about 20% of the population is strictly a price shopper. (Nationally)

      In higher end communities, most people won't shop at a Walmart. Not because the products are bad, or the store is dirty (which they never are)...but because it would affect their self image.

      For example, my wife won't buy groceries in Walmart. She spends between 20-50% more, by going to a higher end store. She doesn't want to be seen in Walmart.

      Me? I don't care. I shop there often. And I shop quite a lot on Amazon. And when I say that at trade shows (in my niche), people think I'm a traitor....because they blame Walmart and Amazon for their low sales.

      All these dealers are doing is trying to advertise the same low priced items you can buy at prices lower than wholesale on Amazon or at Walmart.

      They are missing the other 80% of buyers that buy for reasons other than just low prices.

      At convention talks, I get told "Consumers just want the lowest price on the cheap stuff".

      And I say "Everyone here owns a car. Raise your hand if you bought the cheapest car on the lot". Once I had one guy raise his hand. Smart aleck.

      And then I ask ;
      "Who here bought the cheapest home on the street?"
      "Who goes to the cheapest dentist?"
      "Who married the cheapest wife?" (That one gets a laugh)

      Walmart caters to a relatively small segment of the population. But they get it all.
      I would never try to compete with Walmart. That's how you go out of business.
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      • Profile picture of the author 1Bryan
        Originally Posted by Claude Whitacre View Post

        In higher end communities, most people won't shop at a Walmart. Not because the products are bad, or the store is dirty (which they never are)...but because it would affect their self image..
        It depends on the area.

        I worked at a Walmart for a few years. We had celebrities -- including an Oscar winner -- that came into shop. We had C-suite execs from major corps come in regularly.

        And that Oscar winner had to drive about 30 minutes each way to get to that store.

        My work experience before I got online -- was in an area that is affluent, mostly. There are 2 small cities nearby that are economically depleted. But the suburban areas are anywhere from middle class to millionaire class.

        And we didn't see that much retail snobbiness. Like the first time I saw a lot of high end cars in person was in that Walmart parking lot -- Ford GT supercar, Rolls Royce Phantom, Bentley GT Convertible, plus Lamborghinis and Ferraris etc, etc.

        In fact, about 10 minutes away is a place that rents supercars for the day/week.

        Walmart is a unique store like that -- in the same line will be a legit millionaire and someone from the projects.
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    • Profile picture of the author Alex Cohen
      Originally Posted by max5ty View Post

      How do you explain a Walmart that outsells everybody?
      As savidge4 and Claude stated: Selection.

      There's also two other reasons: Unique Mechanism and Story.

      Unique Mechanism: Their Made in America campaign (unique among major retailers at the time) was a huge success.

      Story: Sam Walton driving to corporate headquarters in his old, beat up pickup was a well-known part of Walmart's story.

      Alex
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  • Profile picture of the author savidge4
    This "Theory" holds true online as well as offline. When selling product online I spend probably more effort on After the sale service type content than I do actually trying to create the sale, and I do this for 2 reasons. #1 Many people search for service related issues for items they are going to buy #2 If they bought the item once, the likelihood of them buying again is obviously present - so helping them through possible solutions in fixing the old, is a great segway to selling them a new.
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  • Profile picture of the author hsingh91
    Points you explained are helpful but we need a time to understand the strategy of marketing. In the whole world for small marketers and small companies, marketing is a challenging task.
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  • Profile picture of the author Aaron Starc
    It is all about the presentation, level of service and how smoothly their query is handled.

    When I think of a store to shop online, the only store that comes to my mind is Amazon.

    Amazon actually goes out of their way to make sure that their customer is well-served and most importantly gets value for their money every time.

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  • Profile picture of the author Reddevil007
    Savidge told me to refer this thread of yours and so far so good!
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  • Profile picture of the author Odahh
    20 years ago I could spend hours hunting through several stores for a pair of jeans that fit and spend 60 bucks or go to wallmart and find a couple pairs in 20 minutes for under 20 buck a piece and had read how it was the same pair different lable .

    Even though wallarts tended to serve lower income customers the area I am from the stores tended to be away from the seedy areas so you felt safer in the parking lot as opposed to the malls or other big stores .
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  • Profile picture of the author Oliver Mills
    Hey, thanks for such valuable information, will use this for the project I am working for, I am currently working on a white label trucking app solution for logistics businesses and startups of all sizes who want their own Uber for trucking app that connects shippers and nearby truck drivers at the push of a button.
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  • Profile picture of the author misterme
    Walmart's USP is low price. So, they won't get the person who wants to spend $$$ on whatever item it is they want to spend money on. Like the guy who just has to have the luxury car. The louboutin shoes. Or the brand name widget. Those are commodities too when you think on it, there are other luxury cars, other ritzy shoes and other widgets. Chances are though, that fancy high price stuff ain't sold at Walmart.
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