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When the market is over-served, even the best cut their price. PDF Print E-mail
Written by Donald Cooper   
ImageSeabourn Cruise Lines is consistently rated the number one small luxury cruise line on the planet. And yet, their scheduled July 22 cruise from Venice to Athens, one of the most beautiful itineraries anywhere, has been advertised and selling at 64% off the regular price.

Three years ago, my wife and I went on a cruise through French Polynesia on the beautiful Paul Gauguin ship at 73% off the publicly listed price.

Two years ago, the Australian winemaker, Wolf Blass, ran ads stating they had been named the International Red Winemaker of the Year and were celebrating this achievement by lowering the price on all of their wines.

Häagen-Dazs, one of the world's premium ice creams, has been on sale twice so far this summer for $2.99. The regular price is about seven bucks. You'd think by doing the work required to be the best, you could get a premium price - but apparently not. The problem is that when you constantly and drastically cut your price, you destroy your brand integrity. Your discounted price becomes your everyday regular price and, then, you're in trouble. In the end, some companies go bankrupt and the market gets rationalized until some misguided entrepreneur jumps in to screw things up again.

So, how is it that even being the best in the world doesn't allow you to get the price you need for what you do? The reason is simple. Virtually every industry is in a crisis of overcapacity. There are too many suppliers and not enough customers. There are too many car makers, too many accountants, too many grocery stores, hotel rooms, mutual funds, retailers of every kind and way too many lawyers. The only thing there's not enough of are taxi cabs in New York City when it's raining.

A hotel company client asked me recently how they can get full price for their rooms, every night. The answer is simple. They can't. I told them that, in the long run, what they have to decide is which end of the market they want to be in and whether they can make more money and have more fun selling $500 hotel rooms for $300 or $120 rooms for $80. That's the reality in any over-served market, including yours.

When the market is over-served, even the best end up cutting their price.

Donald Cooper has been both a world-class manufacturer and an award-winning retailer. Now, as a business speaker and coach he helps business owners and managers throughout the world to rethink, refocus and re-energize their business to create compelling customer value, clarity of purpose and long-term profitability. For more information, or to subscribe to his thought-provoking free business e-newsletter, go to www.donaldcooper.com.

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Donald Cooper
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