THE TROUBLED MANAGER AND THE SHRINKING SALES

Businessman and writer Mark Price shares his workplace fables – true stories from the business front line that can teach us lessons about career success

‘We are more competitive, yet keep losing customers’

‘I’m afraid sales and profits have fallen again,” said the Finance Director to her Managing Director.

“But I felt sure our strategy was bound to work,” replied the Managing Director, scratching his head.

The Finance Director nodded and, for what felt like the one-hundredth time, they talked through their plan. Supersmart sold upmarket items from nicely presented shops with good service. It sold lines that overlapped with its competitors but its own-label ranges were a cut above; its aim was to sell good quality, better quality. But the economy was in a downturn and they had cut the prices of their goods, as had others.

“We are more competitive than ever, and yet we keep losing customers,” the Finance Director mused.

The Marketing Director explained that customers had not noticed Supersmart’s drop in prices, and thought they were being dropped more dramatically elsewhere. Prices had been cut on Supersmart’s own-label higher-quality goods, whereas the competitors had been reducing prices on the commonly stocked brands. To its customers, Supersmart looked more expensive than before.

“We should price commonly sold goods the same at Supersmart as elsewhere and charge more for those goods where customers believe we have better quality,” said the Managing Director. “We won’t change our overall price differential but will change where we invest on price.”

The Marketing Director and the Finance Director both agreed.

“And you need to find a way to tell customers that our prices on common lines now match the market,” said the Marketing Director.

And so that is what they did. Customers came to believe that the prices at Supersmart were more competitive, and sales and profits grew.