I had dinner last night with a friend who works at a small, locally owned supermarket in Michigan.  This time next year, there will be a Meijer superstore less than a mile away. My friend predicts that the market she works for will be out of business.  Why?  Lower prices.

Our conversation got me thinking.  Does the ability to provide lower prices automatically mean superior market performance?  Not necessarily.  In a price sensitive environment, superior market performance depends on two things: how different the prices are  and what the customer thinks they’re buying.

Let’s take the example of a recent proposal I received for some plumbing work.  The work included one big part, a pump, some piping and some labor.  The pump was quoted at $1,100 and I can buy it online for $400. That’s a $700 margin.  The guy who quoted the job came up with the idea of adding the pump and was very helpful when he came out.  I appreciate the expertise and am inclined to give him the business.  But what’s that helpfulness worth?  I wouldn’t think twice about $200 and I’d probably pay $300.  $700 is just too much.

So let’s get back to the locally owned market competing with Meijer.  If the only things the market sells are the same prepackaged goods that Meijer is selling, then the price doesn’t have to be that much lower at Meijer for consumers to switch.  The local market can launch a feel good “buy local” campaign that will add a little value to the items it sells, but that probably won’t outweigh Meijer’s improved selection and the convenience of one stop shopping.  So what should it do?

In order to stay in business, the local market will have to provide a special something that is worth at least the difference in price, value and selection to its core group of customers.  This could be personal service, gourmet products, unique community involvement, dietary advice or something else.  They definitely won’t win competing on price.  Unless they carve out a new niche for themselves that their customers appreciate and will be too difficult for Meijer to duplicate, this time next year they will be out of business.

What about your business?  What do you provide that differentiates your products or services from your competitors?  Are you happy to fight for commodity business or have you redefined the market you participate in?

So you’re starting a business and need a web site.  Great!  What next?  Here’s a step by step guide.

1. Pick a domain name.  Don’t worry if your exact domain name isn’t available.  Come up with something close and then let the search engines handle the details.  For example, if widgets.com is taken, try widgetshq.com or ewidgets.com.  Most domain registrars will help you with this process. DomainsOnIce.com can help you register your domain and this article will help you understand the current state of .com domain names.

2.  Pick a web host.  You shouldn’t need to spend more than $200 on hosting a year when you first start out.  If you think you will because of future volume, start with the cheap host and upgrade when you’re ready.  Your host should support PHP and MySQL.  Most will automatically.  FastWebUpdates.com hosts client web sites starting at just $149 per year.

3.  Install a free content management system.  Why do you need a system?  You’ll want to keep your site fresh and interesting so visitors come back on a regular basis.  A content management system makes this easy.  We recommend WordPress.  WordPress started life as blogging software, and it does that well, but it has some pretty sophisticated features that make it useful outside of the blogging world as well.  A decent content management system lets you add content without knowing a lot of code.  By the way, this site is powered by WordPress and so are our other sites.

4. Customize your look and feel to match your offline image.  You’ll want to coordinate the colors and logos on your site with any business cards or stationary you have.  Most content management systems provide you with a templating system that make this process relatively easy.  This part requires code, so you’ll probably want to contact a web site design company to help you out.  Try FastWebUpdates.com at 888-627-8888.

5. Trick out your new site with features that help you interact with visitors and other sites.  For example, you can use Flckr to manage your images and FeedBurner to track your subscribers.  WordPress plugins make this process quick and easy.  There are plugs designed to help with most previously custom issues like event calendars and contact forms.

That’s it.  Now all you need to do is add your content and you’re good to go.

FastWebUpdates.com has recently helped Clay Cafe of Lubbock and Clay Cafe of Visalia create WordPress driven web sites that integrate seamlessly with Flckr and other services.

People ask us about pricing a lot. It’s on our site and our goal is to keep it straightforward. Everyone gets the same deal.

This is counter to a lot of companies which use “flinch pricing“. Flinch pricing is about finding the highest possible price a customer will pay for every transaction. You throw out a number and, if the prospect flinches, you negotiate.

There’s value in negotiating but that doesn’t mean every transaction needs to be negotiated. For example, with website maintenance, adding on the overhead of quoting and negotiating every change increases the cost of doing business and makes website maintenance more expensive.

As an aside: a side effect of using flinch pricing is that one group of customers, usually those who aren’t as informed about the market they’re purchasing in, ends up subsidising work done for other customers. The service provider ends up with a blended rate that they’re satisified with overall. Some people pay a little more, some people pay a little less.

I prefer up front pricing that’s easy to understand and consistent for all comers. That’s not always easy to find (when I’m dealing with plumbers, for example) but the comfort of knowing that I’m getting the same deal as everyone else is worth the effort.

BTW, the Karass books are leftover from a Karass Negotiation Seminar I went to back in 1995. Yeah. 1995.

We use Google AdWords from time to time. I noticed something interesting this morning. People were searching for an email address on a non-Google site, a search partner, finding my ad and clicking through. Here’s a screen shot of their results:

Now, what you’ll notice is that Comcast claims there are 6 results. In fact, all six of these are ads. There are no search results supporting these ads, just the ads. Another hit that came through was from AOL’s search site. They return sponsored links and shopping results but no actual results.

If you do this search on Google’s site, you won’t see any ads and you’ll get a message saying there are no results. This behavior makes sense. If the user isn’t getting results for whatever they’re searching for, they shouldn’t see any ads either.

I don’t see any value in displaying the ads to either the user or the advertiser–just to the site operator. The site operator wants to maybe capture some small portion of revenue from a user confused about the difference between real results and paid results. So they show the ads. And Google, who also makes money, let’s them.

I would like to see Google’s behavior required on their search partners’ sites as well and I’ve sent Google a note telling them so.

Oh, and I’ve turned off “webmaster”, the keyword that started this whole thing in the first place.

2006/08/09 - Amusing update. Had a voice mail from “Betty” at Dell who found this post and called to a) thank me for the purchase and b) see how things were going. Nice to see they’re on top of blog posts.

We’ve added a new laptop to our expanding computing power. It’s a Dell Inspiron 6400 with 2GB Ram, a killer video card and nice display. The Timbuk2 bag is on the way.

Why do I tell you about these things? You should know what type of computing power your website people use. They should have fast, modern equipment. Better computers mean fewer barriers between what needs to be done and getting it done. I’m not so picky about PC vs. Mac. I chose a PC because it fits well with our current collection more than anything else. That and a similarly equipped Mac would have cost over $1,000 more.

Yeah. Over $1,000. And that just wouldn’t be responsible.