NEWS Price transparency makes life more difficult W
e are becoming increasingly used to checking prices online
prior to making a purchase and the amount of online stores have taken price transparency to the next level. Obviously, this has impacted the fast moving consumer goods market. But to what degree does this also affect the day-to-day business of the mechanical installers? A report from the USP Marketing Consultancy reveals the trends of end-user negotiations as a result of increasing price transparency.
The report says that “installers have the ability to check prices online and order at online stores in order to get the best prices and thereby increase their margins. However, from previous researches on buying behaviour we know that installers, a very traditional target group in a very traditional market, are still quite loyal
to the traditional wholesale. “But this works the other way around as well. When providing a quote, end-users and consumers have the opportunity to check the prices of the products and confront the installers with lower prices found online.
“European installers are often confronted with end-users checking the prices of the products listed in the quote online, and this behaviour has been increasing. Two thirds of all European mechanical installers are forced to negotiate prices with their end-users due to online price checking by end-users.
“In the UK, we can note the lowest percentage of mechanical installers that are forced to negotiate prices with end-users due to online price checking. However, the ‘lowest’ needs to be put in perspective, as close to half of all UK installers are still faced
with having to negotiate with end- users. “Even though 60% of the European installers indicated that they are faced with price negotiation, this is only in 32% of their projects. Obviously, not all projects will contain products that are to be installed and are worth the price checking effort - it is typically done more when the products involved are more expensive. Furthermore, checking prices online and then trying to negotiate prices is more likely to be stronger in the B2C side of the business then in the B2B side. “One thing is for sure, despite the best efforts of the industry, price transparency is here to stay. Furthermore, as web shops become more internationalised, country- specific price strategies will become even more difficult to maintain. Markets with higher prices might
become under pressure from web shops operating in countries where the prices are lower. Installers can be sure that this phenomenon is here to stay and that it will increase further. This will put pressure on the price strategy of the entire business value chain, as installers in turn will try to negotiate better prices with the wholesale, who in turn will look towards the manufacturers for better prices.
“The best bet would be to help the installers explain why their prices are higher than the lowest googled price. The added value they bring and why they charge more for this. Prices will inevitably become more transparent and uniform in Europe, but installers could still make a healthy margin on the products they install, if they are able to communicate why they charge more than the rock-bottom internet price.”
Fieldpiece
www.acr-news.com
January 2021 7
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