Why are small bussiness willing to pay more for lower quality?
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@thecreativeone91 said:
@scottalanmiller said:
Why do consumers (SMBs behave as consumers) buy anything? Sales and marketing. Not market research.
I can assure you this company does not market online or through TV. if would be sales calls (cold calls), business cards etc. if they are doing any marketing at all.
Yup, that's how it is often done to SMBs. You go to places where business owners hang out with sales guys (or girls, I've seen curvy blondes used to great effect for this) where they buy them a beer and do the "we're a local business so you should use us" thing that tends to be rather effective on other small business owners who have this thing for using the guy down the street rather than the guy who is good because they hope to be chosen on the same criteria.
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They look ok to me. Of course, it all depends on how much they cost. They look cheap and cheerful, so if they were actually quite expensive....
I have more of a problem with the content. 10% off what? $750 off what? I've never got this kind of advertising ("call now and we'll give you 10% of an arbitrary price that we set"). We're trying to buy some French windows at the moment and it's impossible to get any prices, even ballpark prices, without registering with resellers and installers and we're reluctant to register because we fear being hassled for eternity by sales reps.
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Not being a video guy - I agree with CB, they look fine to me.
And I agree with everything else CB mentioned.
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Buying locally and from someone you can put a face too is a VERY big deal to SMB. They join the local Country Club and Rotary for networking reasons and only buy from those they meet in those places. There is alot of value to buying from another SMB in their eyes, they don't even compare or look at prices, it's not about pricing at all. It's about buying from the little guy down the street, that is running a business like you are trying to. There is also a bit of give and take there as well. You buy from them they buy from you. Faceless corporations are who they fear because those are the companies that come in and take out small businesses.
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I agree that the commercial is tacky, but there is a reason you see alot of commercials with the same style. When you break down the commercial, you will see that has the same form as many infomercials. Why do they use the same tacky form? Because it works.
People like attractive blonds, soft music in the background, seeing a local guy that looks trustworthy, hearing from an old lady that dishonest business men would rip off, etc. Also, the website and phone number on the screen at all times really drills it into your head, not to mention the very noticeable logo they have coming on and off the screen. Everyone likes to get a deal. The arbitrary 10% off makes everyone feel like they are getting a deal.
This is just years of research that has lead to other successful commercials in the works.
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I see and am all-too-familiar with @Minion-Queen 's point.
My Pops and I bought parts from a local computer store, even after the dot com era began. We eventually wound up opening our own computer store, and guess what? We still bought an awful lot from our "competition".
But they would also send us customers and we would refer potential customers to them as well (our two computer businesses dealt with entirely different customer bases). Buying local is HUGE, especially for a small business -- especially when you can remain on good terms with one another!
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I try and use local SMBs and I'm not in the local country club or rotary. I just think it can be beneficial.
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@Dashrender said:
Not being a video guy - I agree with CB, they look fine to me.
And I agree with everything else CB mentioned.
I'm not a video guy but they look like low budget late 1990s infomercials to me.
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@Minion-Queen said:
There is alot of value to buying from another SMB in their eyes, they don't even compare or look at prices, it's not about pricing at all.
They don't look at prices, but more importantly, they don't look at quality!
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@dafyre said:
Buying local is HUGE, especially for a small business -- especially when you can remain on good terms with one another!
It's also part of what keeps SMBs as SMBs. Which is fine if that is the goal. But big companies think differently - they evaluate the value of the relationship and look to see if they are supporting a business only because of "who they are" rather than "what they do." It's like picking the popular kids for your kickball team at school rather than the kids who are good at kickball. If the goal is to win, you do one thing, if the goal is to hang out with the kids you feel are cool, you do another.
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@Carnival-Boy said:
I try and use local SMBs and I'm not in the local country club or rotary. I just think it can be beneficial.
What's the benefit? I see it as a detriment in most cases - companies that are local, or chosen based on that factor, as less likely to be the best choice and most likely to be basing their business off of being "local". When "local" is the value, the business value almost certainly has to suffer in exchange for that.
There are certain things were the "local" does have value. A restaurant is a great example. You need food three times a day and there are restaurants in every town, in every country, everywhere. Even in ancient Rome. While you can get a lower price with better food somewhere else, you'd need to travel there several times a day to keep using it.
But anything that needs to come to you, needs to be shipped, requires expertise, etc. you want to avoid local. Not rule it out, maybe the best person anywhere is local, but limited or prioritizing by local means you are taking an arbitrary factor and putting that into the equation with things like price, value and quality.
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@scottalanmiller Your "who they are" vs "what they do" argument is something I can agree with.
If the relationship isn't mutually beneficial, then it is most likely time to part ways.
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It's a lot like the study that found that hiring someone "through church" resulted in the worst business relationships. It really had nothing to do with church or religion but just with small social groups where business relationships existed because of a semi-arbitrary discrimination by social group - a smaller version of "buying local."
The vendors (which was often a one man business) were found to be less skilled and more likely to rip off customers because they had two key factors: social pressure to keep the customers from complaining about people in their locality or social group and they knew that their customers had no or very few other options as their selection criteria ruled everyone else out. Having good pricing or doing a good job were not selection criteria for their customers so the vendors had no interest or incentive to do a good job.
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Again it's about the social relationship not really about much else. Remember very few SMB's are looking to be anything other than that. It's not about growing your business to expand your reach. It's about supporting yourself in a comfortable manner and maybe if you are lucky having something to pass on to your kids.
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@dafyre said:
@scottalanmiller Your "who they are" vs "what they do" argument is something I can agree with.
If the relationship isn't mutually beneficial, then it is most likely time to part ways.
There is "mutually benecial" and then there is the best case. I can have a vendor that does an "ok" job and we both make money and we both benefit - unless you are considering the case where there was a better relationship.
For example, I could run a hardware store and get all my stuff from a local distributor and we both make money. But I have to consider the relationship not against "nothing" but against the quality, service and pricing that I could get from someone if I consider all vendors as options and don't let a non-business factor like locality mingle with business factors like price, service, value and quality.
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@scottalanmiller said:
For example, I could run a hardware store and get all my stuff from a local distributor and we both make money. But I have to consider the relationship not against "nothing" but against the quality, service and pricing that I could get from someone if I consider all vendors as options and don't let a non-business factor like locality mingle with business factors like price, service, value and quality.
All things being equal if your SMB isn't looking to grow, then buying local in that situation works. But if you are looking to become the next Lowes or Home Depot, your business will always be looking for a better way to do things -- even if that means taking your business from a local joint to some place down in a big city nearby.
We did this with our compuer store because it made sense. We would have stayed with the local company if we wanted, but that didn't make good business sense for us, since a lot of our customers were wanting used computers and not new computers.
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@dafyre said:
All things being equal if your SMB isn't looking to grow, then buying local in that situation works. But if you are looking to become the next Lowes or Home Depot, your business will always be looking for a better way to do things -- even if that means taking your business from a local joint to some place down in a big city nearby.
"Works" is a grey area here. If the goal of the business is to "exist" rather than to "make maximum profits" then this works. But if the goal of the business is business and to make money, even if it is not to grow in size, then this doesn't really work.
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We have a butcher in our village and I used to buy all my meat from him. It's about a hundred yards from my house. But then a rather good supermarket (Waitrose), opened up a mile away. The problem is the meat from our butcher isn't actually that good, and I prefer the supermarkets, so I've been buying a lot more of my meat from there instead. I always feel really guilty whenever I run into the butcher in the village. The butcher knows I'm buying my meat elsewhere.
I feel bad because he's a decent bloke and I feel bad because supermarkets are taking over the country and we're running out of independent butchers.
On the other hand, his meat isn't that good, so it's not my fault.
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@scottalanmiller Agreed. Why would anyone open a business that is just existing? That sounds like really, really bad planning (if any at all, lol).
If I open a business, I plan to make money with it. I may not become a competitor for HP or Dell, but my goal would be to head in that direction.
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@Carnival-Boy said:
We have a butcher in our village and I used to buy all my meat from him. It's about a hundred yards from my house. But then a rather good supermarket (Waitrose), opened up a mile away. The problem is the meat from our butcher isn't actually that good, and I prefer the supermarkets, so I've been buying a lot more of my meat from there instead. I always feel really guilty whenever I run into the butcher in the village. The butcher knows I'm buying my meat elsewhere.
I feel bad because he's a decent bloke and I feel bad because supermarkets are taking over the country and we're running out of independent butchers.
On the other hand, his meat isn't that good, so it's not my fault.
That's what we found back home. In the "big" village near where I grew up a Walmart moved in, which is awful. Except that it provided us the ability to buy good products at good prices for the first time and it treated its employees legally and with respect. It raised the wages in the region and for the first time low wage earners got healthcare and vacations (the US protects small businesses and does not require them to provide for basic employee needs.) So the quality of life shot up for everyone, shoppers and employees.
Everyone still complains that they aren't local. And I appreciate the value of the local store but if they are using the fact that they are local to not bother doing a good job.... that's the risk. And lots and lots of them abuse it.
Food and retail I think are a bit different (but the effect still applies to some degree) because it's not about business, it is about consumers and price and quality are definitely not the only factors.
