Competing in a Highly Competitive Market
In highly competitive markets, the buying decision is usually based on price, and why not. Everyone is trying to undercut each other, and the product appears to be a commodity. So why not go for the cheapest offer?
Big brands overcome this with massive advertising spends, building on the idea of familiarity and trust to increase preference and obtain a premium. Branding becomes the point of difference for big companies, but smaller businesses either need to discover a niche or compete on price if their product is undifferentiated.
For example, people who want a home loan are most likely to deal with the bank where they have their savings. It’s the safe and familiar choice. Some might even say, it’s better the devil you know….
It might be safe, but will they necessarily get the best deal with the bank? The humble mortgage broker has to compete with the might of the bank, who can usually find a way to shave a 0.25% off their best offer. So it’s all but impossible for a mortgage broker to compete head on with them, even if they may find a better deal than the customer’s existing bank can offer.
There is, however, one thing that a mortgage broker can offer that a bank can’t: a personal long term relationship, and through those relationships, build connections through to their customer’s friends and family. They can stay in touch long after the loan agreement is signed. Perhaps with birthday cards and phone calls. They can invite them to their functions, and become their friends.
They will find out when they or their friends and family need a loan long before the bank knows, because of their relationship, instead of relying, as the bank does, on impersonal letters and brochures sent through the mail. Because the mortgage broker has stayed top of mind and offered a very personal service, when the customer or their friends and family are thinking of a loan, they will think of them first.
For all the bank’s massive advertising budget, you can’t outspend word of mouth.
All you need to do now is to Empower yourself and take action …
May Your Business Be – As You Plan It.
Dr Greg Chapman – The Profit Whisperer
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