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  January 28, 2011
What Would You Like?

 

This last Monday, I had the opportunity to have some after-work drinks with two very good friends, Siyamak and Sanjiv, who own and operate technology companies Skyriver and Bytes Inc respectively.  We meet every so often to share ideas on a variety of topics.  This particular week the topic of the table was marketing.

I first asked Siyamak what his company’s value proposition was and he explained to me that "Skyriver provides cheap professional solutions to small and/or medium sized companies with regards to their communication and IT network needs". 

I next asked Sanjiv what his company’s value proposition was and he told me that "Bytes Inc. offer a cheap custom software solutions to companies looking to develop and maintain applications such as full-featured websites and operational software"

Now I’ve worked with both of these companies in the past and I know from my own experiences, neither company offers anything "cheap"...high quality at a low cost? -  YES...cheap? - absolutely NO...and this is what I told them...they nodded their heads and said, "oh yeah"...that what we meant...

Wal-Mart offers "low prices"; Southwest Airlines offer the "lowest fares"; and Geico offers to "save you money on car insurance".  None of these price leaders offer anything "cheap". 

People don’t want cheap...people want value!

In the present day, cash is tight so people are looking for ways to bring more value to their purchases.  This doesn’t always mean that the lowest price wins

I recently went to Asia, using an economy class ticket on a major airline.  The seat was a bit cramped and the food was edible (but not particularly enjoyable).  Even with these slight inconveniences, I didn’t pay the lowest possible price for this ticket as I valued something greater...a non-stop flight to my destination.  I was willing to pay more for perceived value to me. 

I was willing to pay even more had additional value been offered to me - such as a roomy business-class seat - for say an additional $200-$300...the seat was empty all the way there...and I was willing to give them more money...but the airline never offered...(sounds to me like an opportunity to create some kind "auction system" at the gate to create more revenue for the cash-strapped airlines).

Convenience stores don’t offer the lowest prices groceries...they offer convenience.

Mercedes-Benz doesn’t offer the lowest price cars...they offer quality.

Nordstrom’s doesn’t offer the lowest priced clothing...they offer service.

Apple doesn’t offer the lowest priced cell phones, laptop computers, or music players...they offer reliability.

The lowest price is not the only consideration.  I rarely shop at Costco for my fresh food even though the unit cost is much lower than that of my local grocery store...why?...because I learned that most of the time I cannot use the entire large package of food before it spoils and therefore I am forced to throw the unused food away.  Even if I pay a lower unit cost, overall I don’t gain any real value by purchasing my food in bulk.  This is not to say that I don’t make other purchases at Costco...just not fresh food.

I never want anything cheap...and business people need to remember that...customers want value and they are willing to pay more for something they value...

Finding out what your customers value is the first step to a successful sale.  Do your customers want fast deliveries?  Consigned inventory?  Customized features?  24-hour product support?  Smaller sized packages (maybe Costco would have me as a customer with a smaller package size)?  A different color?  Special markings?...

The only way to really find out is by asking the question...(unlike the airline with that unsold business-class seat)

OptiFuse NEVER sells anything cheap...because we know that you don’t want that...you want quality and service for less money...

Thank you very much for your support of OptiFuse, where cheap in not in our vocabulary...

 

Jim Kalb
President
OptiFuse
jimk@optifuse.com


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