25 November 2006

Are you Price Competitive?

The key for any successful product or professional service firm is to create a sales environment where the prospect's perceived value of your offering is higher than the selling price of your product or service and that's true whether you are selling or delivering.

This process of value positioning requires consistency throughout the commercial process include strategy, sales and marketing. Value positioning is an active tactical approach that will help your sales team sell at a higher sales price.

To sell value, never market your firm's product or service as "Price Competitive" or by stating "We have a price advantage." Instead, always use the term "Value Competitive." By focusing on value and reducing the impact of price, you have positioned yourself differently from your competitors

All your marketing and sales messages must reflect this positioning. Never say "price competitive" in your marketing, website or press releases. It is a huge liability for prospects to see your corporate marketing with the "price competitive" term displayed. It tells them immediately that you are willing to match price, so the target will apply pressure for you to prove this statement over and over again - regardless of how competitive your sales price already is.

When cold calling or giving your elevator pitch to a prospect for the first time, communicate your uniqueness based on some element other than price. Customers don't buy your product or service; they buy pain management. What makes you different? What is your value proposition?

If your firm is selling horizontally into several markets, you are putting this strategy at risk, so horizontal sales should be attempted only if you are confident that the commercial messages can be controlled. Target businesses may regard your offer as non-specialist if they see evidence of horizontal sales activity and will expect you to be more price competitive despite what your value positioning may say. The first defence is that you are a specialist - in the management of a specific type of pain which is shared by a number of industry sectors.

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Blogger Paul said...

Such marketing approach sounds fine in theory, but I am afraid it has some serious pitfalls when it comes to practice. It is true that product's value, not the price should be the core message during the marketing and sales efforts. But: (1) any new product should ALWAYS be price competitive with current market offers, unless you are planning to target exclusively a high-end user. (2) price advantages are an essential part of any value-message, otherwise your products will be perceived as "interesting, but PROBABLY too expensive". It has the same psychological effect as when you see great-looking luxurious products with no price tags, which is (in the sales industry) a message of highly-priced products.

Thus, a short formula for a successful marketing campaign may be: tell HOW your product is better + give a reliable PROVE + say that it is PRICE COMPETITIVE against competition's products, which have lower value.

8:47 am  

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