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‘Me too’ does not a ‘best buy’ make!

9 June 2011 No Comment

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Hi.  I’m Dave Dolak, U.S. Product Manager for Light Scattering Technologies here at Malvern.  I have responsibilities primarily for our Zetasizer line of instruments.

I heard a news story on the radio recently that discussed the financial challenges of electronics retailer, Best Buy, here in the United States and how the company’s stock had just hit a 52-week low.  As part of the story, the reporter stated that Best Buy executives are aware that many consumers go to their store to try products, learn more about them and see them physically but then return home to search the best price and purchase them on the Internet.

The story struck me as profound as it made me think about great service companies and whether or not their days are numbered.

In this day and age of instant information via the Internet, comparative shopping from search engines and comparative shopping sites, Smartphones, major purchases going out for bid or through the tendering process and the general trend for people to shop for the lowest possible price, I have to wonder if the poor service companies are eventually going to drive out the good service companies in many markets and industries.

Let me explain.

If we fall into the trap of always shopping on low price then we are forcing suppliers to eliminate as much of their cost structure as possible so they can compete purely on low price.

I see this in the scientific instruments field.  Suppliers create “me too” offerings and appear to match on paper the product specifications of the innovators and then simply offer a very low price in the hopes of capturing one-time sales to boost their quarterly numbers.   This type of behavior does not place any value whatsoever on scientific know-how, innovation, pre- and post-sale support or product quality.  In fact, if we all purchased our goods based purely on low price then we are actually stifling innovation and asking for inferior products of dubious quality and questionable durability with poor support just to satisfy our desire to pay what is perceived to be a low price.

In college I once had a professor who told us that his father used to tell him, “We are not so rich as to be able to afford cheap products.”  What his father meant was that the products with the lowest purchase price are actually often the worst overall value when you consider support and service issues, poor quality, product underperformance and the costs of accelerated replacement or frequent repairs.

It all makes me wonder how much it really costs us to shop purely on low price and what message this sends about the priority we place on innovation, quality and product support.  If we all source our products and supplies based on lowest purchase price then we are sending a message to suppliers that we only care about them reducing their cost structures as much as possible which in turn will force them to cut their service, support and R&D investments.

I’m not sure I want to live in a world in which innovation is punished and poor service companies are allowed and encouraged to drive out the good.