Competing on Price, Quality or Service?

[Bob Hubbard]

It's impossible to compete on all 3. So, how would you rank yourself? What is most important to you and least important to you?

I know in my own industries, there are hosts that charge $5 a month and offer a ton of features, but support and quality of service is non-existing, and if you have a problem, they don't care. I know there are hosts who offer little, and charge alot more, yet you would swear they wait around simply to serve you. I'm in the middle myself, with more of a focus on quality and service, and not so much on price.

Where are you?

 

[terryl965]

Bob the DFW area has more school per sqaure mile than anywhere else, so for me it is about Quality and service. Quality is making sure the students are getting what they are paying for and understand what it is we do and don't do. Service is the way we treat our very students it is more like family than anything else. Price is the last resort with us, even though it should be at the top of our list when we opened the doors it was not set up that way. For what we offer we are below market value, but we give better quality of material. I like being below the market it lets people who would not have th chance to train be able to train.

 

[kidswarrior]

Price: I don't charge--it's not my vocation, but avocation--so that means either my teaching is invaluable or un-valuable, take your pick.

Quality: Treat these kids as if their life depends on learning the art well--which it very well could. Many have been jumped in three- or four-to-one situations before coming to me. One was hit in the head with a crowbar about 50 feet away from me (that was about 10 years ago, before I stared teaching MA), etc. etc. The streets here can be mean, and I want the guys to be safe, and yet still learn the value of being kind to others.

Service: Yes, they are welcome to serve me all they want.

 

[Brian R. VanCise]

For myself it is all about quality. Everything else figures its way out in the end.

 

[grydth]

It's impossible to compete on all 3. So, how would you rank yourself? What is most important to you and least important to you?

I know in my own industries, there are hosts that charge $5 a month and offer a ton of features, but support and quality of service is non-existing, and if you have a problem, they don't care. I know there are hosts who offer little, and charge alot more, yet you would swear they wait around simply to serve you. I'm in the middle myself, with more of a focus on quality and service, and not so much on price.

Where are you?

Honestly, having run a business and coming from a family of execs and professionals, I disagree with the basic premise. It is not only possible but necessary to compete on all 3.

Brian VanCise is, as usual, quite correct about quality being paramount. Customers won't forgive even cheap products easily breaking or blowing up.

But ensuring high quality hardly mandates high prices or poor service. Remember prices paid by the consumer often reflect costs passed along by the merchant.... and those costs often result from shoddy suppliers, avoidable expenses, poor investments, needless middlemen...... the whole chain from business plan through acquisition through sale should frequently be reviewed. Passing savings instead of costs to your customer means a great price for quality goods.

Similarly, great customer service begins with reps who are knowledgable, professional and courteous. These need not at all vary inversely with quality. In fact, the better the quality the less stress upon and expense from your servicing operation.

 

[tshadowchaser]

sometimes students could care less about the quality of the product, feeling that the more they pay the better the product. We all know that is not the truth but a misconception that many have.
Quality of instruction is based upon ones ability to transmit knowledge and the knowledge on has. Not all are equal in the ability to transmit and pass on their knowledge, while other make up stuff as they go along to impress the unknowing students. A instructor with great knowledge may be able to impart more to his/her students but may not have the personality or teaching abilities to do so.

 

[kidswarrior]

sometimes students could care less about the quality of the product, feeling that the more they pay the better the product. We all know that is not the truth but a misconception that many have.

Very true. And this is compounded by the fact that for the first few years of training, the student probably can't discern just how good the quality is, anyway. S/he may be getting world-class training, but since it's delivered in an off-off main street setting, for a reasonable fee, they might conclude it must not be all that good. Discernment is a dying art.

 

[Bob Hubbard]

Honestly, having run a business and coming from a family of execs and professionals, I disagree with the basic premise. It is not only possible but necessary to compete on all 3.

Brian VanCise is, as usual, quite correct about quality being paramount. Customers won't forgive even cheap products easily breaking or blowing up.

But ensuring high quality hardly mandates high prices or poor service. Remember prices paid by the consumer often reflect costs passed along by the merchant.... and those costs often result from shoddy suppliers, avoidable expenses, poor investments, needless middlemen...... the whole chain from business plan through acquisition through sale should frequently be reviewed. Passing savings instead of costs to your customer means a great price for quality goods.

Similarly, great customer service begins with reps who are knowledgable, professional and courteous. These need not at all vary inversely with quality. In fact, the better the quality the less stress upon and expense from your servicing operation.

So, how do I (or anyone) compete against someone who works for free, charges a buck a month for "unlimited service"?

How would an instructor with a $3,000/month rent plus utilities plus insurance who must charge $100 a month minimal to break even (before paying himself) compete against the uninsured garage-dojo who teaches for beer money?

Now, in my business, I can rent a server for $29 a month, or I can rent a server of $300+ a month. I choose the later because the hardware has proven to be more reliable, the support superior, and the problems significantly lower. But those costs have to be passed on to my customers. So they will pay a higher price for a higher quality of service. I'm not driving a H3, living in a 24,000 sqr ft mansion, drinking Dom. (But I'd like to be) I target getting and giving the highest possible quality, and I've yet to find a cut-rate provider who can provide that.

 

[tshadowchaser]

Advertising and lots of it. Newspaper ads, phonebook ads, demonstration, seminars, anything that puts your name and face in the public mind and eye all the time.
Newspaper announcements of things you have done or your students. Posters in local laundry’s, free bulletin boards, quest appearances at local groups (exchange clubs, rotary, elks, masons, etc ) where you can show off your priduct, no matter what it is.

 

[kidswarrior]

So, how do I (or anyone) compete against someone who works for free, charges a buck a month for "unlimited service"?

How would an instructor with a $3,000/month rent plus utilities plus insurance who must charge $100 a month minimal to break even (before paying himself) compete against the uninsured garage-dojo who teaches for beer money?

Now, in my business, I can rent a server for $29 a month, or I can rent a server of $300+ a month. I choose the later because the hardware has proven to be more reliable, the support superior, and the problems significantly lower. But those costs have to be passed on to my customers. So they will pay a higher price for a higher quality of service. I'm not driving a H3, living in a 24,000 sqr ft mansion, drinking Dom. (But I'd like to be) I target getting and giving the highest possible quality, and I've yet to find a cut-rate provider who can provide that.

Well, since I'm perilously close to the 'beer money' description (tho I don't drink, and don't teach out of my garage, but a community center), I'd like to draw a line between martial arts instructors--all of whom have different geographical, SES target populations, and vocation vs. avocation needs--and other businesses, like internet providers. In other words, we really have two discussions going here: MA's, and business in general.

 

[grydth]

So, how do I (or anyone) compete against someone who works for free, charges a buck a month for "unlimited service"?

How would an instructor with a $3,000/month rent plus utilities plus insurance who must charge $100 a month minimal to break even (before paying himself) compete against the uninsured garage-dojo who teaches for beer money?

Now, in my business, I can rent a server for $29 a month, or I can rent a server of $300+ a month. I choose the later because the hardware has proven to be more reliable, the support superior, and the problems significantly lower. But those costs have to be passed on to my customers. So they will pay a higher price for a higher quality of service. I'm not driving a H3, living in a 24,000 sqr ft mansion, drinking Dom. (But I'd like to be) I target getting and giving the highest possible quality, and I've yet to find a cut-rate provider who can provide that.

Well, this example with a dojo is kind of what I was getting at... that dojo of yours may be too big or too small for your present and projected student base, the tenancy contract poorly negotiated, other factors like parking/location/comfort must be assessed....... if you've made a poor choice here, you'll be either starving or passing increasingly higher costs to a shrinking student base.

I would say you compete by advertising your 'plus's'........ can a class do a form together in a garage? Can you take a full swing with a katana or strike with a bo in a garage? What's it mean, to a customer, for a dojo to have insurance? Are seminars from outside experts hosted in somebody's garage? Do you have better qualifications than other guys - if so, sell your expertise package and the advantages of your school.

Another way of competing is to buy the other guy out or bring him on board .... happens all the time in business. Some pretty good experts are teaching out of garages for a variety of reasons. If the garage guy is decent, why not offer him a limited partnership where he teaches his art a night or two a week at your place..... instead of competing, you both offer the public a wider variety of MA in a better locale... and you both prosper. I personally have seen an Aikido dojo offer a night of iaido training and a karate school a night of Tai Chi.... to the advantage of everyone.

 

[kidswarrior]

Well, this example with a dojo is kind of what I was getting at... that dojo of yours may be too big or too small for your present and projected student base, the tenancy contract poorly negotiated, other factors like parking/location/comfort must be assessed....... if you've made a poor choice here, you'll be either starving or passing increasingly higher costs to a shrinking student base.

I would say you compete by advertising your 'plus's'........ can a class do a form together in a garage? Can you take a full swing with a katana or strike with a bo in a garage? What's it mean, to a customer, for a dojo to have insurance? Are seminars from outside experts hosted in somebody's garage? Do you have better qualifications than other guys - if so, sell your expertise package and the advantages of your school.

The presupposition in this whole line of reasoning is that growth is both good and universally sought. This is a good 'ole American capitalistic view, and while there's nothing wrong with it imho, it doesn't apply to everyone. Some people just don't care about numbers, or don't care as much as others. They don't care to 'compete' for numbers. For example, the CMA sifu who has only one or two students, and turns down others who ask to study with him.

OK, I'm rereading the title of this thread, and see it's about competing, so having brought up my alternative view, I'm bowing out now. :asian:

 

[Ninjamom]

You may not be able to be 'best' in all three, but you need to be competitive in all three.

For instance, I own a small store that sells books, music, gifts, cards, and church supplies. With easy access to deep discounters that sell from warehouses with half of my overhead (like Amazon, B&N, Sam's, Costco, etc.) I cannot go head-to-head on price for every item. However, I can find and get exclusive items not available from these places (like from local authors, local artists, smaller suppliers in other countries, etc.) and I can get better prices by taking advantage of specials and timed sales directly from publishers/manufacturers (more work for me, but something the 'Big Box' stores don't give their local managers the authority to do). So, while not every item in my store costs less than every item in theirs, my prices are competitive, and often lower, and I can almost always beat their prices for quantity purchases.

The biggest draw for my store, though, is definitely in SERVICE. My staff is trained to be knowledgeable and make great recommendations. We try to stay current on what is new in every topic we carry. If we don't have an item in stock, we will find it and order it at no extra cost. If you need it today and can't wait we will call around town for you to see if someone else has one in stock.

Part of SERVICE is also ATMOSPHERE. We try very hard to maintain that 'small-town/small-store' appeal. We actually talk to Customers. We have free coffee and tea available, a stuffed chair where Dad can sit while Mom shops, DVDs for kids to watch while the adults browse. We host in-store events featuring local authors and local musicians.

How can this translate from a bookstore to a martial arts studio? I would say that you need to find what your competition does and do that well, but find what makes you unique and do that exceptionally well.

 

[jks9199]

What I want from any business is the right balance of quality and service at the right price.

I've walked out of places because the sales staff couldn't be bothered to help me. And others where they bent over backwards to help me -- but the quality of the merchandise or services didn't match the price. I can be as helpful as you want playing dentist... but, unless you're after a total & bloody extraction, my dentistry wouldn't be worth paying anything for!

For my students, I try to offer them honestly what I was taught, and try to be as available for them as my instructor and seniors have been for me. Dues are only $10 higher than when I started, 20+ years ago. It's up to them to decide if the value is worthwile.