Use Price to Attract More Attention for New Business Models

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Use Price to Attract More Attention for New Business Models

Several times a day, you probably get a telephone call offering you some new product or service that the tele-marketer claims will be really helpful to you. You don't have time to listen or to try out all of these things, so you probably avoid whatever is being offered. Your potential customers may see your new pricing structure the same way. How can you overcome that barrier to attention?

Sometimes the benefits of a new business model just have to be experienced to be appreciated. Customers are naturally suspicious in such a situation, and don't want to waste their time and money. Temporary price cuts can sometimes overcome that resistance and help establish credibility faster and less expensively than other methods. When you are using this approach, you should be sure that everyone understands that the low price levels are a temporary way of introducing what's new.

This approach has been highly effective in helping retailers with new concepts build initial traffic into the store. Take items that everyone trusts the quality of, and offer them at a price that is unlikely to be repeated. Advertise those offers all around, and you will soon be wall-to-wall people. Make the experience a good one, and they shoppers will be back when the prices are raised to sustainable levels. To get the best results, you should have the bulk of your items at normal prices during the introductory period so people can get a sense of what the costs will be like when they next return.

By developing price-based introduction methods as part of your new price-based business model, you enhance its effectiveness. Let's look at Southwest Airlines. The company is still expanding its national availability on a city-by-city basis. Southwest doesn't want to be in just any airport. It wants to be in airports near where the people are that are not crowded and do not experience many flight delays.

When the company enters a new city, it offers extremely low fares in order to entice people to try its no-frills, good service features. This usually triggers a price war from competing carriers, and draws a lot of attention. Southwest performs well during this period, and soon will have 30-40 percent of all the traffic at the new airport.

At the same time, the price war usually leads to permanently lower prices at that airport. Flyers develop a new habit of traveling to that airport, and the volume of the airport may increase by more than 50 percent in a year. Habits have been reformed in favor of Southwest in a way that is consistent with the company's normal, low-price philosophy. That's a good concept for your to apply as well.

About the Author

Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at http://www.2000percentsolution.com .

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