Positioning and inflationary pressures
Think very hard before you cut prices to win business
Key takeaways
· Positioning is a key part of an adventure business’s strategy
· It can be tempting to slash your prices, especially in tough economic times, but think very hard first!
· Some Do’s and Don’ts to protect your long-term business and survive
Regular (or even irregular) readers of the Business of Adventure will know that the benefits of having a strong market position (being clear ‘what you want to be famous for’) is central to the success of the businesses we’ve profiled. For examples, check out Esther Foster - a climbing instructor with a strong niche in coaching women. Or M&T Adventures, which focuses on adventures for children (links at the end of this post).
And the pricing element of positioning is often something that comes up in our discussions with them. However high quality a service you want to offer, there’s often a temptation to price lower than maybe you should. The reasons adventure businesses cite for this include:
“I’m just starting out so I just want to win some business”
“To win clients I’m going to have to undercut the competition”
“There are new entrants coming into the market and we need to match our prices to make sure we don’t lose work”
In recent months, there’s been a new one: the impact of high inflation and the increased cost of living meaning clients have less money to spend on outdoor adventures.
Inflationary pressures
In the light of this challenge, we thought we’d pull together some pertinent lessons from the adventure businesses we have been talking to, some of whom are long enough in the tooth to have seen inflationary and recessionary conditions before.
The consensus is that, while tactical flexibility is essential, you should resist the temptation to abandon or undermine your strategic positioning and branding as a knee-jerk response to a crisis. If you’ve spent time investing in your position, and all that that entails in terms of your service, then think very hard before you undermine that strategy, because it’s what sets you apart from the competition and underpins client loyalty.
For example, slashing your basic pricing is dangerous because it’s hard to come back from and, equally importantly, it creates confusion in the client’s mind, generating impressions like:
“This looks like a quality operation but the pricing makes it feel it’s too good to be true….”
“If they’re that cheap, does that mean they’re compromising on safety?”
Some Do’s and Don’ts for protecting your position
From our work in adventure sector and beyond, here are a few Do’s and Don’ts to help you avoid undermining a core position:
DON’T slash fee rates or prices as a first step to attract new business: for any business that operates outside the ‘cheap as chips’ commodity space, this is just going to undermine any perception of quality. You may want to be flexible with your pricing, but don’t trumpet it as your key differentiator.
DON’T target markets at the opposite end of the spectrum to normal: if you usually do work for families, how credible are you going to be suddenly chasing work from large corporates?
DO maintain your service delivery standards: while you may have to make choices on spend, think very carefully before you do anything that will undermine your clients’ experience – and those TripAdvisor reviews!
DON’T take on work you wouldn’t normally do, especially if you don’t have the expertise. If you’d normally refer it out, keep doing so – protecting your referral relationships for the future is an important a part of maintaining your positioning.
And finally,
DO review the practical implications of your positioning in the light of changing market conditions. All positions need to evolve, just don’t rip them up in a panic!
Links:
M&T Adventures Part I and Part II
