Is Selling Cheap Product a good choice for your bottom line?

I talk to a lot of Parts Managers.? One common theme is “my customers only want the cheapest of ______”.? It makes sense because many customers will tell you that your price is too high.? It is interesting that they tell you this regardless of the products actually in your store.? Why is that?

?Cheap vs Quality

?First let’s see if we can figure out if your customers really want cheap products or if they are open to quality products.? In order to do this, we have start with a simple question, “What is my customer purchasing?”??? We often lose sight of the fact that customers do not just purchase a product, they purchase an experience or solution.? So, when a customer is purchasing a tongue jack, they are really purchasing the ability to easily lift the trailer coupler off the ball.? When they purchase a king-pin stabilizer (tripod), really, they are purchasing the ability to sleep through the night when their partner gets up to go to the restroom.? When they buy those slide-out-supports, they are purchasing the peace of mind knowing that their slide-out will not slump over the years and they will not develop leaks in that area.

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When you put it in that context, they really don’t want a tongue jack that is going to struggle to lift that trailer.? They don’t want a tripod that is going to wear out in a year.? And they really don’t want a slide-out-support that is going to cause damage to their slide-out.? If they purchase “cheap” that is generally what they will end up with.? When they purchase quality, they never have to think about those problems again.

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That is why according to Firstinsight.com “Historically speaking, quality has been top-of-mind for consumers and was more important than price. In 2021, FirstInsight.com conducted consumer research to temperature check market behavior, and consumers ranked the quality of a product 51% higher than the price.”? The older the customer base, the more this is true.? Even though our customer base is getting younger every year, it is still skewed on the older side.

?Your reputation

If they do purchase that economy product that causes them problems, who are they going to blame?? Certainly, they will blame the manufacturer, but have you ever noticed that they also blame you … the dealership?? The reason for that is that they view your carrying a product as an endorsement of that product.? “If ABC RV carries it, it must be good”.? When it isn’t, your reputation takes a beating.

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Think about this…. If you sell a cheap tongue jack with a one-year warranty and they later find out that Ultra-Fab has a tongue jack for a few pennies more, but it has a 5-year warranty or even a 10-year warranty, how are they going to feel about you?? Or if they purchase a cheap slide-out-support and then find out that Ultra-Fab has the only slide-out-supports that CANNOT damage the slide-out…. How will that effect their view of your reputation.

?But they say they want the product cheaper

?You want to endorse (stock) quality products and your customer says your price is too high.? Worse yet, the customer comes into your facility and sees what tongue jack you carry and then scans it to see what pricing they can get online.? And then, right while standing in your store, they purchase that product cheaper online.? This situation happens every day.? And it happens whether you are selling cheap product or quality product.? The reason is that the customer wants to purchase the product you endorse (stock) but they do not want to overpay for it.? They want to get the best deal they can on the product that you endorse (stock).

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You can resolve this by being determined to only do business with companies that have MAP (Minimum Advertised Price) policies.? I’m sure most people are aware that MAP policies require anyone that sells the product to sell it at or above a stated retail price.? Sometimes that price may be manufacturer’s suggested retail price, or some figure slightly below that.? In either case, the idea is that no one (online or otherwise) can sell below that price.? The result is that everyone (online and otherwise) ends up selling the product for practically the same price.? Now when they look up that price while in your store, they find it at the same price you have marked, and they go ahead and purchase from you.

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Typically, manufacturers that use MAP policies have higher quality products and diligently protect the value of those products in the market.? That is exactly what you want in a partnership, so it makes sense to do business with those that conscientiously protect your competitive position and who work to protect your margins.

?Synopsis

I have yet to find an RV dealership whose customers truly want cheap products.? Maybe it exists, but I’m still looking.? Your customers want quality products at a reasonable price.? You can achieve that by selling products from manufacturers with a MAP policy.? Doing so will protect your reputation, will ensure you are endorsing (stocking) quality products, protect your competitive position and protect your margins.? Ultra-Fab works hard to be one of those types of partners.? It is another way that Ultra-Fab shows we are here to help you make more money.

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About Raymond Padgett

Raymond Padgett has been in the RV industry for 35 years.? He has run a Parts & Service at a dealership, worked in Sales & Category Management at the largest distributors, was Vice-President of Marketing for a major supplier and now is Vice-President of Sales & Marketing for Ultra-Fab Products.? If you want to reach out to him for comments, feel free to email him at [email protected] or call him at 404.754.8928.

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