Strategy | Pinpointing Product Priorities

It's planning season, that time of year when every organization large or small is struggling to refine its strategic focus for the coming year.

We have in fact been working with a small business client on just such an effort. The big pieces of the plan have solidified and the client is so delighted, they were happy to share a high level overview here.

Let's take a look.

Two Out of Three

There's an adage in business that with any product or service, you can have two out of three critical things. These are:

1. Price
2. Time
3. Quality

Not familiar with this concept? Here's how it works:

Price Pressure | Internal Forces Revisited

Naming the problem is the first step in solving the problem. BUSINESS AXIOM

We have, I believe, made a sufficient case for the existence of price pressure in all its varied forms.

Sometimes it comes from external forces and at other times internal ones.

With this in mind, we’ve captured 15 common forms of internal price pressure.

Price Pressure | External Forces Revisited

Nowadays, people know the price of everything and the value of nothing. OSCAR WILDE

Many sales and marketing pundits claim there is no such thing as price pressure.

Are these claims true?

Or are such claims just contrary, quotable and fundamentally flawed?

I'd argue the latter. What about you?

Price Pressure | Market Forces & the Solyndra Fiasco

What do you get when you mix market forces with commodity pricing and a delusional business plan?

Answer: Solyndra.

As you know, Solyndra, a California-based solar panel manufacturer, filed for bankruptcy on Aug 31, and the company is currently under FBI investigation. At last count, US taxpayers lost half a billion dollars on that deal.

Goodbye Greenbacks, Hello Green Energy highlighted a few basic stats. The news is worse than that superficial examination indicated.

Price Pressure | Internal Forces

Things only have the value that we give them. MOLIERE

Internal forces are a very real factor in any price pressure analysis.

What is internal price pressure?

It’s when you’re so motivated to make the sale, close the deal or keep the customer, you:

Price Pressure | External Forces

End the practice of awarding business on the basis of price tag alone. W. EDWARDS DEMING,
14 Points for Management (1950)

Price pressure comes in all shapes and sizes, and from both internal and external forces.

Let's tackle the latter first. What is external price pressure?

Price Pressure | Death by a Thousand Cuts

Profit is not a dirty word …
JAMES RHODES, former Ohio governor

Price pressure can be subtle or blatant, mild or severe. Whatever its form, it’s an integral part of business.

It's easier to recognize when it comes from the customer or the marketplace. It’s tougher to recognize but equally damaging when it's internal and the wounds are self-inflicted.

In a recent discussion on price pressure, a client observed that salespeople often try to offset cost increases by adjusting the sales price at a straight dollar-for-dollar ratio. It looks good on the surface, but when you do the math, it’s a defacto reduction in profit margins.

Price Pressure | Self-Inflicted Wounds

In the 1987 film, Baby Boom, there’s a scene every business person can appreciate.

JC Wiatt, the central character played by Diane Keaton, accidentally discovers an untapped market. She’s delivering sample jars of homemade baby food to the rustic general store when some out-of-towners approach and ask about price.

First, she tosses out a low figure. Then, with each admiring “ooh-aah” from the group, she blurts out a higher number until she lands on a figure nearly double her starting price.

It was a true win-win scenario: The buyers got a great deal, JC got a great price. In the real world, however, such clearcut win-win experiences can be elusive.

Price Pressure | Are You Holding the Line?

Price pressure is alive and well, and it's affecting every business and sector.

How do we know?

Last week, Bob Chapman, Sandler Sales coach, conducted a Price Pressure mini-workshop hosted by Dickman Industrial & Electrical Supply for the Sidney-Shelby County Chamber of Commerce.

Among the nearly 40 participants, the consensus was clear: Price pressure is present in every segment of the market place. We're all feeling it and we're all struggling to find effective ways to hold the line.

Price Pressure | Is it Hurting Your Bottom Line?

by Bob Chapman & Barbara Spencer Hawk

Price pressure takes many forms in today's business climate, says one business owner, and everyone's feeling it to some degree.

Our white paper, Price Pressure: Is it Hurting Your Bottom Line?, identifies the varied ways customers are exerting pressure and the steps you can take to counter it to protect your profits.

Price Pressure | New Survey Results

Our recent survey and participant comments indicate everyone has some concern about price pressure and its implication for the future.

In our survey, 100% of participants (54) indicated they experience some degree of pressure in most sales encounters.

Briefly, the survey responses indicated the pressure to cut price is:

Price Pressure | Product Life Cycles

Price pressure is a complex condition that involves more than buyer-seller relationships or the state of the economy.

Charlie Puissegur, of CHPuissegur & Associates, reminds us that product life cycles and other related forces create their own form of pressure. He says:

I believe a general condition of over capacity for many products and services exists today, and to the extent one's products and services are in the group of those which have an unfavorable supply/demand ratio (which itself has a range of severity) the pressure will be greater.

Price Pressure | Beware the New Buyer

Mal Bass, of Global Executive Forum Group, shared an example of a different form of price pressure, in repsonse to our article, Is Price Pressure Affecting Your Bottom Line?

Mal said:

This is an excellent paper that addresses an issue that has been ongoing for my nearly 50 years of professional life.

Here is a brief overview of a situation that I just learned about recently but have seen many times in the past. The theme could be called “Beware the new buyer.”

Price Pressure | What's Your POV?

There are many price pressure points of view (POV).

In Price Pressure: Fact or Fiction?, one sales executive described how over time the protracted recession and recovery had reduced pressure. Why?

As companies streamlined and laid off, there were fewer workers at all levels. Price pressure receded as companies focused on acquiring material and parts, so they could push product out the door.

A small business owner shared another perspective.

Is Price Pressure Affecting Your Bottom Line?

by Bob Chapman & Barbara Spencer Hawk

The Manufacturing & Technology eJournal has just published our article, Is Price Pressure Affecting Your Bottom Line?

Read it and share your comments, questions, feedback and examples.

Add your perspective to the mix by taking our survey in the sidebar. [See updates below.] We're collecting data for a comprehensive white paper, so your input has been and continues to be invaluable.

Price Pressure | Preliminary Survey Results

Price pressure is fact not fiction for many businesses, according to participants in our recent online survey.

Specifically, 100% of the ten online survey participants experience some degree of price pressure on a regular basis:

• 20% say price pressure is mild, occurring 40% of the time or less
• 20% say price pressure is moderate, occurring 60% of the time
• 60% say price pressure is significant, occurring 80% of the time

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.

Price Pressure | Fact or Fiction?

In the summer of 2008, right before the economy crashed, author and marketing guru Seth Godin declared there was no such thing as price pressure.

He went on to say, if you're experiencing price pressure, it's a message from the customer you're not delivering sufficient value for the price you're charging.

You're not selling a commodity unless you want to, he asserts.

Fast forward to 2011 ...