Buy Buy Never Knowingly Undersold | eCommerce Matters Ep. 015

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In this episode, Rob and Philip discuss John Lewis’s recent price promise shift, why your product mix is critical, plus explain the relationship between trust-building with consumers and low prices.

Hosts: Philip Huthwaite (CEO & Founder of BlackCurve) and Rob Horton (Product Director at BlackCurve).

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Full Episode

Podcast Summary

Introduction

In this conversation, Philip Huthwaite and Rob Horton discuss the concept of "never knowingly undersold" and its implications for John Lewis, a well-known British retailer.

The Problem with Blindly Following Competitor Prices

One of the main points discussed is the danger of blindly following competitor prices as a pricing strategy. Simply matching prices without considering other factors can lead to problems. Competitor prices may not reflect a like-for-like comparison in terms of product quality, service levels, warranties, return policies, or overall customer experience. It's important to take these factors into account to ensure customers receive the full value of their purchase.

Lack of Differentiation and Brand Impact

Blindly matching competitor prices can erode a brand's differentiation and undermine the perception of value. By solely focusing on price, a brand risks losing its unique selling points and fails to convey the overall customer experience and added benefits that set it apart.

Operational Challenges

The conversation also acknowledges the operational challenges of continuously tracking and adjusting prices to match competitors in a dynamic market. It's emphasized that efficient supply chains, stock management, and pricing tools are necessary to keep up with market fluctuations effectively.

The Importance of Market Benchmarking

To ensure accurate benchmarking, it is essential to identify key competitors who offer similar products and services. Not all competitors may offer the same level of service, warranties, or other benefits, so it's crucial to select relevant competitors for comparison to make accurate pricing decisions.

Protecting Profit Margins

Blindly matching competitor prices can lead to a decline in profitability, especially if a competitor has more favorable supply chain arrangements. It is suggested that businesses should focus on fair market pricing that maintains a margin supporting the sustainability and growth of the business.

The Power of Brand and Customer Loyalty

The power of brand reputation and customer loyalty in influencing purchase decisions is highlighted. John Lewis, as a trusted brand, offers a positive customer experience that should be leveraged and valued over constant price matching.

Opportunities for Pricing Strategy Optimisation

The conversation suggests that John Lewis can use its pricing strategy as a strategic lever to gain an advantage in the market. By analysing sales figures, stock levels, review scores, and product mix, the company can make data-driven pricing decisions and continuously refine its approach.

Transitioning to a New Pricing Strategy

Acknowledging the challenge of transitioning away from the "never knowingly undersold" slogan, it is suggested that John Lewis embrace the changing landscape of online retail, leverage its infrastructure, and focus on exclusive products to shape a new pricing strategy that maintains brand value.

Final Thoughts

In conclusion, the conversation emphasizes that while competitor analysis is important, it should not be the sole driver of pricing decisions. Finding the right balance between competitive pricing and preserving brand value is key.

 

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