We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • INDUSTRY PRESS ROOM
  • ABOUT
  • CONTACT
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • Parcel Forum 2022
    • MODEX 2022
    • Upload Your Video
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • Parcel Forum 2022
    • MODEX 2022
    • Upload Your Video
Home » it's the price, stupid!
outbound

it's the price, stupid!

March 1, 2004
Mitch Mac Donald
No Comments

We interrupt this column for an important announcement: Price matters. Yes, it's time to face the facts. Whether the buyer's a middle-income consumer or a multi-million dollar corporation, the key driver of the "buy" decision is price.

Now that might sound intuitive, yet many of us have been propagating a far different story over the years. For decades, business press editors, consultants, researchers and analysts have been proclaiming that price is only one of many criteria used by buyers (both individual consumers and businesses) choosing among roughly comparable products and services. Not only is it just one of many criteria, the story goes, but it doesn't even place all that high on the list when buyers rank the many factors.

Bunk! Those claims are half right at best. Fact is, people and businesses care about price, and they care deeply. Indeed, recent reports on consumer spending patterns indicate buyers may care more about price than just about anything else.

Consider the fastest-growing segment of the retail sector: the so-called "dollar stores." At a time when year-over-year sales declined in retail specialty stores overall and even powerhouses like Wal-Mart saw scant growth, 99 Cents Only, Family Dollar and Dollar General all watched sales climb at a steady 4-percent clip.

And we're not just talking poverty-stricken pockets of Appalachia, northern Maine or the rural South. The fastest-growing outlet in the 99 Cents Only chain is located in Beverly Hills, Calif. That's right, nestled right up with the swanky shops of Rodeo Drive, you have the fastest-growing store, in one of the fastest-growing chains, in one of the fastest-growing segments of the retail economy. And the growth is driven by price. Not quality, not style, not customer service. Price!

In the logistics world (and in the transportation sector, in particular), study after study has downplayed the importance of price when companies select freight transportation services. Regardless of who conducted the survey—professional associations, magazines, colleges or consulting houses—the research into what propelled the "buy" decision invariably concluded that the service's price ranked somewhere well down the list of buying criteria. Almost to a one, the surveys showed that factors like reliability, low damage rates, high-tech tracking and tracing capabilities and billing accuracy overshadowed price.

Yet these studies inevitably left carrier executives and sales reps wondering where all these logistics buyers who cared so little about price were to be found. "Show me a company that wants to buy my services without regard to price," they'd say, "because I can get rich selling to people like that."

Sadly, it seems, those people do not exist. The surveys that say otherwise are simply delivering the results the authors wanted to hear or confirming what respondents believed they should say—that price is only a secondary consideration. Secondary in the research labs and consulting houses, maybe, but not at the bargaining table. Considerations like ontime service, damage-free handling and good customer service are just the ante: you don't get to the table without them.

Any lingering doubts will be dispelled in the weeks and months ahead as several market forces converge to drive LTL freight rates higher. To offset rising costs (especially for insurance), LTL carriers are demanding higher rates, and with tightening capacity, they may be able to command them. But the carriers that find ways to hold rate hikes to a minimum will find shippers flocking to their doors. Because in the end, price matters.

Material Handling Transportation Technology Supply Chain Services Automatic Data Capture Global Logistics Business Management & Finance Logistics Network Design
  • Related Articles

    It's the exports, stupid!

    the price isn't right … yet

    Forget the steam drill. It's John Henry versus the driverless car

Mitchmacdonald
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.

Recent Articles by Mitch Mac Donald

20 years later, the question remains the same: Are you up to SPEED?

Hail and farewell: interview with Gail Rutkowski

Thought I’d something more to say …

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • Big and bulky last-mile delivery segment set for hot growth

  • Outlook 2023: What’s in store for logistics/supply chain?

  • Ports, maritime operators see tide turning as ocean freight tsunami subsides

  • In Person: Steve Beverly of Penske

  • InPerson interview: Rob McKeel of Fortna

Now Playing on DCV-TV

89cfed30 8aac 4284 960d c8c8c1886e16

Have you checked your read rate lately?

DCV-TV 4: Viewer Contributed
No reads. Unaccounted for boxes. Boxes sent to the wrong place. A logistics nightmare! But this nightmare doesn’t have to come true. SICK’s linear line scan camera is what dreams are made of for your logistics operations. And if you’re worried about motion and vibration from conveyor belts...well, there’s no reason...

FEATURED WHITE PAPERS

  • The five best applications for robotic lift trucks in warehouse environments

  • Fulfillment Facility Improved Efficiencies by 4x

  • 3PLs: Complete Orders Faster with Flexible Automation

  • Reusable Packaging for the New Wave of Supply Chain Automation

View More

Subscribe to DC Velocity Magazine

GET YOUR FREE SUBSCRIPTION
  • SUBSCRIBE
  • NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing