Price Pressure | The Debate Continues

By Bob Chapman, Guest Contributor

Reader comments in response to Price Pressure: Fact or Fiction? have been so thought-provoking, I wanted to continue the dialogue. My experience comes from meeting with business owners and discussing their sales issues.

Specifically, Charlie P's comments clarify the theory of price pressure as a function of supply and demand. Today, supply is greater because we buy in the global marketplace, which is full of marketers wanting to commoditize the products and services. Commoditization occurs when supply is greater. Thus, the commodity providers are feeling price pressure.

Doug B's comments make a valid point from the view of a distributor who has, at times, been pressed to detail bids down to the individual item price level. This approach allows the buyer to pick and choose which items to buy from him or another supplier where the item price is cheaper.
I would make the point that manufacturers are being asked to quote on projects that will be compared to competitors worldwide. People like to buy from people they know and trust. But pressure continues to come from buyers who expect both lower pricing and the same values they've always received from their favored vendor.

In terms of the current selling climate, this is what I've been hearing from manufacturers:
"Please quote this item and do not call with questions."
"Part XYZ must be quoted for the next year of fulfillment."
"Starting next month, reduce by 5% the price of the part you provide."
"The buyer showed me a quote for less than my costs."
"They put my part on the online auction, and I don't believe the pricing I'm seeing."
Have you been hearing these or similar remarks? Of course, I coach my clients to maintain their margins in order to provide the values their clients need and want. Low-price providers come and go, or drop out of business altogether.

Even commodity providers have areas of differentiation. They package differently, invoice differently, ship differently, and offer different services, response times, personalities and language.

Price is never the real issue, I often say, and I stand by that statement. However, when the buyer won't respond, it may be that price is the only issue.

Is that not price pressure?


Bob Chapman, Sandler Sales trainer and coach, is responding to comments related to Price Pressure | Fact or Fiction. For the full picture, read the article and comments, too. Be sure to participate in our periodic price pressure surveys and share your experiences to add to the dialogue.

Update: See the Price Pressure | New Survey Results.

Price Pressure | Internal Forces
Price Pressure | External Forces
Price Pressure | Self-Inflicted Wounds
Price Pressure | Is it Hurting Your Bottom Line? (white paper)

No comments:

Post a Comment

Related Posts Plugin for WordPress, Blogger...