Posts by: Tim J. Smith, PhD
I have seen three or four multinationals, and four to six local suppliers sell the same core product in the same country, at roughly the same price. Because there is so much competition in these markets, customers ask for discounts and drive suppliers to bid against each other to win their business. It is hard to make a stable supplier business in these situations. How can one win? And, what does value-based pricing have to contribute to these markets?
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What better way to attract customers than with a discount? I’ll tell you what is a better way: Redefine your business into something customers actually want to engage as a first resort, not as a cheap resort.
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Because the exchange value approach examines the focal product against its next nearest competitor from the viewpoint of a specific market segment, it creates a focused picture of how an offering is likely to be evaluated by that specific segment. If more segments and competitors are to be considered, more models of the Exchange Value to Customer are needed. This leads to better and more accurate pricing on a segment-by-segment basis.
More What will Gillette do? As a starter, they cut prices by 12%. Good for consumers (and society overall), bad for investors. Competition’s role is to drive prices down and quality up. This is part of the reason private capitalism is better than state-controlled enterprise.
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Our own research—that of Homburg, Jensen, and Hahn—as well as research by Hinterhuber and still other works by Liozu, repeatedly indicated firms that engage sales, marketing finance, and pricing leaders in pricing decisions outperform those that don’t. At this point, we may even call this settled managerial science.
More “As for his real estate properties, my advice would be to divest himself of all his upscale properties. The cash infusion this would generate would encourage Trump to develop a large chain of medium-priced hotels in smaller markets. They would cater to the Trump voting bloc, and could also be very profitable.”
More Let me get this right: Grainger’s “pricing action” was to lower prices. The result was higher volumes and lower gross profits. The aim was a clear market share take. And CEO Donald Macpherson is happy with the result?
More Can both product managers and salespeople have their incentives and key performance indicators aligned to the corporate goal: profits? Yes. They can…
More Notice that the solution many companies have taken results in sales and product management being unaligned. Sales focuses on their individual account needs while product managers focus on creating solutions to address challenges, which may be faced by multiple customer segments.
More What can sales managers do to reduce the risk of account loss? According to their research, putting top salespeople on the account doesn’t do the trick at all. Rather, putting a person familiar with the account’s industry on it, even if their past sales performance is average or even below average, can almost eliminate the risk of account loss.
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