Well, I hope this helps you in your decision process and remember in all marketing, segmentation if one of the first critical step in any successful marketing activity!
RHL 9/9/10

Recent data indicates that tradeshows have been on the decline for a number of years. Reasons for this vary but two are the economy and the newly emerging alternatives to tradeshows.

Now the downturn in the economy made corporations look at expense items and increase their cost cutting activities. Tradeshows were one of the areas that got hit very hard.   It is a very expensive activity when one considers the cost of the floor space, construction of the booth, staffing ( lodging and travel), entertainment, pre and post advertising, lead generation programs, professional hawkers, video production, specialized collateral, give a ways, etc., etc.  And let’s not forgot the potential attendees. They too work for corporations, and their management is doing the same cost cutting activities…getting approval to go to tradeshows is becoming very difficult.

Second, tradeshows in most cases (there are always the exceptions where certain industries, tradeshows are doing fairly well) have become alumni reunions or a chance to pass your resume on to your competitor.   At one recent tradeshow that I attended, I would conservatively estimate that the ratio of potential buyers to vendors was one to twenty! 

The economy probably put focus on the cost versus returns on investment metric for tradeshows, but I think the real negative impact on tradeshows is coming from the increasing alternatives now available.

Some of the byproducts of the Internet relative to tradeshows are seminars, webinars, podcasts, virtual tradeshows, web sites, blogging, user’s groups and live video demonstrations.

The first step for many corporations was to not withdraw from being at a tradeshow, but to cut back on the size and the amount spent, augmenting the shows with some of the above mentioned activities.

This way, there was presence at the show so no one would think they were going out of business and by physically participating some lead generation could be realized and/or a product/service introduction  could be made if it was appropriate.

As the stigma of not attending a tradeshow has decreased, corporations are shifting more to events like seminars, virtual tradeshows and other alternatives. 

So as I have always stated, there are choices and now, more than ever, there are numerous alternatives to tradeshows.

Here are some suggestions on selecting where you might spend your marketing dollars when it comes to tradeshows.

1-      Look at the tradeshows past attendance record, mix, and profile to see how closely it matches your customer profile.

2-      Which one of your competitors, partners or major clients are attending the shows you are considering?

3-      Are you planning on having a major announcement (product, service, technology or partnership) that would generate increased awareness or people to come to your booth?

4-      Will the blend of items like webinars and targeted email campaign deliver a better return on investment (leads/dollars spent) then one tradeshow?

5-      If a tradeshow does make sense, maybe consider “partial” involvement (fewer days, or smaller booth, etc.) and augment the show with a pre or post email campaign.

6-      Consider outsourcing the tradeshow activity to reduce some of the cost and time involvement.

7-      Consider attending the tradeshow as a speaker, with an “off-floor” presence to meet current and potential customers and partners.

8-      Do a complete ROI and potential sales impact on whatever marketing mix scenario you are considering.

See you at the next virtual trade show!

RHL 9/1/10

Around this time last year (9/1/2009) I wrote A Checklist for Making the Year. In it I highlighted tactics that the CMO could use in working to finish out 2009 on a positive basis.

In reviewing that post a year later the tactical advice provided is just as applicable this year as last, and bears repeating:

1. Protect and cultivate your current customers.  Losing a key customer to a competitor not only reduces revenue; it gives the competitor a weapon to go after your customers.  It is harder (more costly) to get a new customer, and very costly to lose an old customer.  To make sure that your customer base is protected, keep your customers happy.  Make them understand that their needs are being met and help them understand your goals, Remember, any additional sales, upgrades, migrations, etc. that you make to the installed-customer base is less costly than selling to a new customer.
2. Hone your value proposition message.  Today’s environment reflects fear and uncertainty.  A company’s value proposition should address these concerns, by merging the differentiated message (faster, easier to use, longer lasting, etc.) to creative financial offerings that enhance or increase the ROI… in a few words that are clear, memorable and always visible.
3. Enhance your value by offering more at the same price. This is not a recommendation to cut prices, but rather a recommendation to augment the product/service offering with more value.  Free shipping, free installation, lower cost training, extended warranties, no-cost upgrades, etc. can be tied to the basic value proposition to make a more compelling story.  Each of these tactical moves can be limited by time, or tied to volume, so that when the economy picks up they once again become chargeable items.
4. Understand your demographics.  If you have had success in a specific vertical, geography or segment, continue to push each and every part of that area.  Having success in the education market doesn’t automatically mean that you will be successful in Financial Services.  You might find it easier in a growing economy but trying to convince buyers in today’s economy is difficult…especially when competition is protecting their turf.
5. Increase your visibility.  Traditional ways of communicating your message/value proposition are changing.  The reach of print media is down, fewer people are attending trade shows and seminars, direct mail, both snail and email, appears to be less effective, traveling road shows aren’t getting the audiences they have in the past, etc.    Increasing your visibility in this environment requires the pragmatic integration of applicable social networking tools to an expanded program.

In a recent talk at the Wharton School, UPS’ CEO Scott Davis was reported as saying:

‘The current shaky economic environment is a challenge for all leaders, Davis acknowledged. He detailed three types of corporate responses to the economic downturn. “Some companies won’t make it. Some will be crippled; it may take five, six or seven years for them to get back to the level they were at before the collapse.” The third type of company, however, will keep its long-term goals in sight. It will pursue strategic growth in line with its core values. These companies will effectively balance conventional and digital business, strive for efficiency and think globally. Consequently, Davis said, these companies will learn, adjust and evolve as the global economy recovers. “Some companies will come out of the recovery stronger than ever. Times of great uncertainty are also times of great opportunity.” ‘

I asked the following a year ago;  “As the CMO, can you spell out the new plans and programs you are going to implement after Labor Day?” To this I should add Scott Davis’ words….These companies will effectively balance conventional and digital business, strive for efficiency and think globally. Is this what you are doing?

RHM  8/27/2010

Many key customer meetings fail because the sales team didn’t deeply understand and effectively exploit the opportunity – they didn’t do all their homework.   The “opportunity” is not just what the team thinks it can sell.  It is more about knowing how to best position and present what they can sell — given the corporate strategies, executive personalities and competitive offerings.  And for that they need an information-fed customer strategy.

Cases in Point:

The good:

– A sales team planning to sell a large-scale enterprise IT solution to Sears Holdings changed its strategy after research found Sears was in no condition to make the purchase.  Sears had serious IT deficiencies and greatly lagged its top competitors technologically.  However, just post-merger with K-mart, the combined entity had serious leadership and decision-making issues, and the team now expected slow comprehension and execution of the solutions.  Based on these findings the sales team decided to pitch smaller, point solutions, and provide a vision for longer term solutions.

– A leading IT outsourcing firm selling ERP services to a large chemical firm tweaked its positioning after research found that the firm’s new CIO was “in way over her head”.  We learned that this CIO had no formal IT education, had just been hired away from a much smaller firm, and that her last ERP implementation was now failing miserably.   Her new CEO had publicly promoted his new ERP plan and his new CIO as its champion.  We suspected she was a bit overwhelmed.  Based on this intelligence, the IT firm subtly positioned its ERP outsourcing service as a way to the take the load of her back, and even more delicately – as a way to save her job.

The bad:

– At a customer briefing, the CIO of mid-size manufacturer began by asking the sales team if anyone was familiar with his firm’s business strategy.  After an awkward silence, he dejectedly looked down and explained their strategy.  Clear to me was that this deal was already lost – the sales team didn’t do its homework.

– Just recently, a state government CIO told me how frustrated she was with IT vendors lack of preparation — and respect, and she now insists that vendors understand their business strategy before they walk in her door.  “This is public information”, she tells them, “Find it”.

…and the ugly

– I witnessed a Fortune 100 firm senior executive, in support of a regional sales team, fly cross-country to attend a regional executive briefing — and swore never to return as he witnessed an unprepared, unfocused sales team stumble its way through the meeting.

From what I have seen, too much expectation is put on each sales person to analyze their strategic customer opportunities – and so this analysis rarely gets done to any acceptable level.  Customer meetings often take place with sales teams recognizing a lot more could have been known about the opportunity and decision makers.  No real connection is made with attendees.  Meetings meander.  Presentations are less customized, executive speakers less focused, and conversations less relationship-oriented.  Customers leave under-whelmed.  Sales teams leave potential relationships on the table.  Selling to strangers is a drag.

Sound familiar?

Despite the availability today of just about any customer information, few do the hard work of deep-dive customer analysis.  Everyone recognizes the need for customer research before a meeting.  Crucial information lies not just in SEC documents, Hoover’s and Crush reports, but also in blogs, Tweets, Facebook, LinkedIn, and every trade magazine and website on earth.  Add to this your firm’s hidden internal knowledge both from former sales teams and from your Market Research team.  Ignore the entirety of available strategy-setting customer intelligence and you are your competitors’ dog meat.  Ok, that was harsh, but you get the point.

What is Deep-Dive Customer Analysis?

Deep-dive is digging further into issues, reading between the lines, and constantly asking why.  Say you find a customer’s CEO quote in his quarterly earnings update that indicates a future 50% reduction in IT expenditures.  Digging deeper is trying to find out why.  What is driving this reduction?  Are they simply finishing off a large IT contract or are they fundamentally changing their IT approach?   How should you re-position your solution in light of these deeper findings?

The problem is this — Sales people simply don’t have the time, skill, or will to dig deep –and it is a tough assignment.  Research is not their specialty — and I would argue that today it takes a specialist.  Few world-class meetings result from second-rate research efforts.

Funny to me is how firms spend big bucks on McKinsey, Accenture, Gartner, IDC and even their own in-house research departments for overall market assessments, but when it comes to an actual, live strategic opportunity, they expect their sales people to Google and Hoover their way to the finish line.  Why does quality research support stop when it is most needed and when the ROI is so clear?

Serving a nice hot beef brisket lunch to a CIO who had recently blogged about his family’s devotion to Veganism?  Oops.  I bet the competition served nice hot Soba Noodles with Peanut Sauce.

Public information may be your gift, but it’s also your burden.

Here’s a solution — and what some top firms do: Embed a “Customer Strategist” into sales teams for strategic accounts.  Appoint a senior level analyst who understands the sales process, and who can gain the respect of, and influence “Type A” sales people and executives.   The Customer Strategist is responsible for deeply analyzing select customer opportunities, and for helping to construct intelligence-fed account and meeting strategies.  This person could also help coordinate customer briefings – ensuring sales strategies and presentations synch and reflect research findings.

The strategist’s role is to ask the sales team at each step of the sales cycle, “So what information do you need to close this deal?”  Then they use their skills to answer these questions, and proffer their own ideas and recommendations.  They filter, analyze and help integrate customer intelligence into the overall sales strategy.   They ensure the sales team conducts a focused, coordinated, visionary, and relationship-building customer meeting.

The illustration below depict the role of an embedded Customer Strategist:

Think about it – a more informed, focused, and relationship-directed sales strategy makes meetings more effective, efficient and fun.   Everyone wins.

For big-ticket, strategic opportunities, having a professional “Customer Strategist” perform deep-dive research duties for sales teams will accelerate opportunities and relationships.  Let the top sales people sell, and an embedded Customer Strategist support strategic opportunities – together they can deliver much more effective, focused, successful and fun customer meetings.

In future blogs, I will discuss more specifically how to dig deeply; what tools to use and how to spot business and individual drivers.   I will also discuss how firms point to price as their customers’ chief concern, but research often proves them wrong, as they were leaving millions on the table.

Ned Daubney is Principal Consultant at SalesTeam Strategies, http://www.salesteamstrategies.com/ with over twenty five years of sales and marketing management and research experience in both high-tech and financial services industries. Ned holds an MBA in Marketing from Babson’s F.W. Olin Graduate School of Management, and a BS in Accounting from the State University of New York at Plattsburgh.

Note: this article is focused on business to business not business to consumer (spending on items like advertising and promotions are usually greater in the consumer market).

Sales People One primary communication method in the B2B world has been the sales person and their personnel selling efforts, but this method is not only very expensive but does not scale well. Suggest augmenting this with other communication tools.

Advertising’s primary contributions are to provide awareness and provide creditability for the vendor (if you do not believe me, seen all the Toyota ads lately!). It has been proven that sales and profits are better with advertising then no advertising at all. So make sure your advertising first supports the overall marketing strategy and is integrated with other marketing activities. Lastly, if you do use advertising, make sure it will pass the “threshold” of awareness. Too often marketing managers start an ad campaign and don’t run it long enough to create awareness and thus those dollars were completely wasted. So if you don’t have enough in the budget to be successful, utilize the money somewhere else.

Direct mail or email campaigns:  Direct mail is good for promotions, supporting sales activities, and communication to your various channels. Emails can address the same issues with the added benefit of having a quick response or the ability to receive a request or answer a question in a very timely manner.  Again like advertising, one shot will NOT accomplish your goals, you need to contact with your targeted audience via multiple mailings.

Trade shows: Good place for a product or service introduction, speaking engagements, leads, and face to face with potential buyers. But given that, I believe trades how are actually on the decline, so I would highly recommend analyzing the benefits of being at a trade show versus its overall costs.

Seminars/Webinars:  A relatively inexpensive tools, especially if your goal is awareness, thought leadership or demonstrating a customer application.  You can have a “captured” audience and have follow ups with them.

Catalogs:  Are basically dying if not already dead, mainly because of the web and its ability to show products and services in a more robust manner, Web catalogs are less expensive and they can reach a far greater audience.

Social Media (Blogging, twitter, etc.) The use of these media by enterprises is growing every day.  Their primary purposes are for awareness, thought leadership, lead generation and getting feedback from the community. I would recommend as a minimum that enterprises at least “listen” to what your customers are saying about you and your products.

So, again, it is not how much one has, we are all painfully aware of that, but what the appropriate mix is.  You need to balance your marketing communication methods to optimize your returns.   This mix selection will vary depending on what phase your enterprise is current in and your overall goals.  A start-up might use the social media tools to generate awareness and creditability, while an established enterprise might rely on its sales team along with some direct/emails and seminars.

In any case I would suggest testing your mix on a selected sub segment and analyze the results and make any adjustments before going with the full programs.

RHL 8/24/10

This the third is a series on planning for 2011

For many B2B companies, September to December will define their year.  Current indicators are pointing to a flat to down macro economic environment, which does not bode well for those who had planned on growth in Q3 and Q4, with the flat to down forecast extending into 2011.

CEO’s and CFO’s, sensing that they cannot hit top line numbers (revenue), will strive to “manage” their companies by cutting expenses to meet or come close to net income goals.

THIS IS EXACTLY THE WRONG STRATEGY.

• In 1929, Ford outsold Chevy 10:1.  For a number of reasons, Ford essentially stopped advertising in 1929 and 1930.  By the mid 30’s Chevy, which introduced new products and continued to advertise was outselling Ford by more than 2:1.
• Going into the Great Depression, Post Cereal was the number one breakfast cereal company in the US.  They stopped advertising.  Kellogg’s became the number one breakfast cereal company.
• Proctor and Gamble moved to a new medium, Radio, created a new method of advertising, “soaps” and came out the Depression stronger than when they went in.
• In a previous article, I quoted, Ralph Grabowski who has proof that Marketing expenditures should exceed Engineering expenditures by 2.5:1 or more! In order to be successful.

Certainly conditions have changed from the 1930s.  However, the basic principles remain the same.

• Buyers need to know who you are, and why you are better/different.  Instead of print and radio, a better (lower cost) way to reach them may be through social media.
• Value predominates.  As every company is looking to cut expenses, those that can deliver high value will win out.  This can be delivered in the product itself or through a combination of products and services.  But the buyer must be aware of the value, before the sale, in order to judge it against other vendors.
• Consistency is important.  Buyers want to believe that the supplier is going to be there “tomorrow.”  Since tomorrow in this case is indefinite, it is important for the seller to project an image, via branding, of solidarity and permanence.  Cutting Marketing dollars is not the way to do this.

There is a high probability that B2B buying cycles will be extended and that some companies will “make-do” with what they have and forgo purchases.  However, companies can take advantage the opportunities provided by obsolescence and organic growth by providing true value propositions and positive customer experiences.

In order to be included on buyer’s short-lists a seller must be known.   In the Great Depression this was accomplished by using print advertising and a new media, Radio, and by promoting newer products.  The same applies today, with the opportunity to use new media as a means to promote your messages.

Instead of cutting expenses, the CEO and CFO should be investing in Marketing.  As the CMO, can you show them the impact of your LinkedIn, Facebook and Twitter placements?

Related:

http://firealarmmarketing.com/2010/06/24/how-much-marketing-is-enough/

http://firealarmmarketing.com/2009/03/30/369/

http://firealarmmarketing.com/2009/06/03/why-doesnt-the-buyer-buy/

RHM   8/12/2010

This is the second in a series of articles about planning for 2011.

We are in the Dog Days of Summer, a hot stagnant period marked by a lack of progress.  Not surprisingly, this is often the time when many take well-earned vacations and when the wheels of commerce slow.

How does this impact the B2B CMO and how can he/she best use this time in planning for 2011?

First, quantify the knowns and givens.  For example:

• Macro view –
  • Economic growth will be slower during the second half than in the first.
  • Un and Underemployment rates will not change before the end of 2011.
  • Inflation is low, and there is a risk of deflation.
  • There will probably not be any additional stimulus money, from either the Federal or State governments.
• Micro view -
  • Half the year is gone.  Unless your company is dependent upon on providing services during the holiday season, you have a good idea what the year is going to be.
  • You probably know where you stand vs. competition.  Relatively few companies introduce new products during the second half.  What is is.
  • Growth, i.e., increasing market share will come from taking sales away from competitors vs. a general growing demand.

Second, make some assumptions (of course yours will be more specific):

• Depending upon how well you have done against plan, your budget for the balance of the year will be constant or cut.  It is unlikely that it will increase.
• At least one competitor will attempt to grow share (or remain in business) by cutting prices.
• The buying cycle is going to stretch out.
• Reaching buying decision makers is going to be more and more difficult.
• At least one key employee will leave.

Third, develop action plans for Management review late in August, early in September before all thoughts turn to making the month/quarter.  Examples of plans that would fit the assumptions above are:

1. A plan to involve management in reaching out to the installed base/key customers…showing them the love.
2. A plan to pre-announce products/features that are planned for the first-half of 2011.
3. A plan to “repackage” current products and services that addresses customer complaints and provides something new, providing an answer to competitive price cuts.
4. A plan to increase social networking/media focusing on key product differentiators.
5. A plan to hold a series of training webinars for the sales force, led by Product Management, that reinforces the corporate message, reviews the differentiators and address customer objections.
6. A contingency plan outline.  The CMO cannot plan for what is unknown, but knowing that there are unknowns allows for shorter reactions.  For example, no-one knew that volcanic ash was going to disrupt air travel to Europe, or that oil in the Gulf of Mexico was going to impact shrimp prices.  But those firms that have contingency plans are better able to ride out the storm.

With the exception of the “repackaging” effort, implementation of the other plans requires people’s time.  Since in the Dog Days things are moving more slowly the CMO has some time to put these plans together, sharing them with management at the end of the month.

How are you spending the Dog Days of Summer?

Related:

http://firealarmmarketing.com/2010/06/17/2011-planning-and-trends/

http://firealarmmarketing.com/2010/04/01/2010-the-first-milestone/

http://firealarmmarketing.com/2009/10/29/guide-for-the-cmo-in-planning-2010/

RHM  8/4/2010

Before you answer the question, have you done and do you understand the following issues in determining your selling price?

1-      Are your current product price objectives in line with the corporate objectives (profit oriented, gain market share, etc)?

2-      Do you understand the values (quality, serviceability, ease of use, etc.) customers put on your product/service?

3-      How is your cost method derived (sell price minus margin to arrive at cost or is it a combination of fixed and variable cost)?

4-      Do you understand the competitor’s strategy (gain market share or market entry) and their cost structure (initially a loss leader or penetration)?

5-      Are there any legal issues regarding price reductions( some cases like market monopoly/oligopoly)

6-      Does this price reduction impact other products in your portfolio?

For more details on pricing, see our Pricing Guide.

Given the above, here are some considerations you should consider before you react.

A-     If you react with a price reduction will it be less then preventable sales losses?

B-      If you react will the competitor just reduce their price again

C-      Where will multiple reductions lead you ( margin issues or sales loss impact)

D-     If you react, how will it impact other products/service?

If you have good product/service differentiations, then I would suggest stressing your benefits and value proposition via marketing messages to your customers in some form of a campaign.  Also look at the competitor’s pricing strategy, cost structure and past record regarding price changes.

Third, look at the market with regards to new potential technologies, customer’s experiences with your competitor’s product and any past or present technical issues.  Use the results to combat the price changes.

In most cases responding to a price reduction by matching it results in disaster.

George Cressman Jr. & Thomas Nagle of the Strategic Pricing Group state “Pricing is like playing chess: players who fail to envision a few moves ahead will almost always be beaten by those who do.”

Cressman and Nagle recommend the following:

1-      Never participate in a competitive engagement you cannot win.  Fight from strength NOT your weaknesses.

2-      Compete from an advantage position ( example, value differentiation), do not compete by using the competitor’s rules

In summary,

** Know your overall pricing objectives and know your competitor’s objectives and position.

** Project the possible next steps (what if scenarios).

**Engage from a competitive advantage.

**Consider actions such as improved warranties or including some form of service.

** Use price reduction as a very last resort!

RHL 8/3/10

There is an old joke about economists that goes, “If you have six economists in a room, you will have 7 opinions.”  Recognizing this phenomenon, the Associated Press seeks to derive a consensus by surveying up to 50 economists on a quarterly basis. The most recent report suggests that economic growth for the next 12 months will be relatively low, and that unemployment will remain where it is today.  Significant factors in developing this prognostication are the continued high unemployment, State budget shortfalls, European debt situation, and the weak housing market.

On the positive side, the economists think that we are growing, i.e., that the recession has ended, and reports show that Americans are saving more than they have in the recent past.

Good information, but how does this relate to the CMO or Product Management struggling with making the year and forecasting 2011?

First is the necessity to face reality.  Unless you have a game changing product like an iPhone, it is unlikely that you will see double-digit growth.  High single digit projections should be viewed as the optimistic forecast.

Second, Marketing budgets will be flat to down over the period.  The 2008 guidance, “You will have to make do with less” will come back or be reinforced.  For the CMO this means expanding on those tools and tactics that work, ruthlessly cutting those that don’t and exploring new, lower cost ways of reaching potential customers.

Third, your customer base is the lowest cost way to generate new and/or incremental sales.  Add-on features, new services, and related products should all be developed and directed to the customer base.

Fourth, product differentiation and market segmentation have to be foremost in all product development activity.  The more that you can differentiate your product, to the key target market segments, the more you insulate yourself from price competition and commoditization of your product/services.

Fifth, if you have not done so, now is the time to reduce the number of products and services that you offer to only a few.  Sunsetting products is never easy and is often emotional as the different stakeholders (Sales, Management, Key Customers) weigh in.  But, reducing the number of products and focusing on the key ones has the potential to reduce costs and increase profitability.

Like the economist’s opinions, these suggestions are at a high level. Every company is different and will embrace different tactics.  The key to remember is that it appears that for the next 12-18 months economic growth will be slow, and to act accordingly.

How are you integrating macro economic forecasts in your planning for the balance of 2010 and 2011?

RHM  7/29/2010

Pricing is one the four “P’s” of Marketing.  The right price drives margin, profit, and to some degree perception of the product.  But it appears that a fixed price is rapidly going the way of the buggy whip.  If this is true, has the CMO lost one of his key tools?

It is an axiom among hi-tech buyers that negotiating a price in the last week of the quarter will result in a cost savings over the “quoted” or “regular” price.  Whether the cost savings are a lower price or are expressed as additional features at no cost, extended warranties or something similar, the result is the same…lower margin for the seller.

On the other side many Sales Managers, backed by Management, tell their sales force, “Don’t let price get in the way of closing a sale!”  This is communicated to the buyer, either directly or indirectly, again resulting in a pricing concession and lower margins.

The offline and online business press has been buzzing about deflation, often drawing parallels to the Japanese experience of the past 15 years.  In a deflationary environment, buyers wait to the last minute to make their buying decision, and then seek the lowest price for a product that meets their needs.  Sellers, with inventory on hand or needing to meet a goal, recognize that something is better than nothing and compete for the business based on price.  After repetitive downward rounds marginal vendors go out of business, leaving larger players who are still forced to compete on price.

Assuming that deflationary pricing is a fact of life through 2011, how should a B2B CMO price his/her product?  Some suggestions are:

1. Emphasize the value proposition of the product/service to the buyer, highlighting the unique differentiating features that will save the buyer time and money, allowing him to be more profitable using your product.  This can be communicated via:
   1. Use cases
   2. Testimonials
   3. Blogs/Tweets
2. Motivate the sales force and buyers to make a decision earlier, thereby blocking out competition.  If there is tacit acknowledgement that closing the sale in the last week of the quarter results in a 5% price reduction, offer those monies as an incentive to close the deal earlier in the quarter.
3. Increase the price of add-ons and service.  If these are normally “thrown-in” in order to close the deal, make their perceived value higher so that fewer concessions have to be made to show a price reduction.
4. Provide an estimated ROI based on purchasing the product.
5. Modify the financial terms of the deal; lower payments for the first six months, lower interest rates, lower cost service contract, etc.
6. Lower your costs by working with Management and purchasing to ensure that your margins remain constant under the downward pressure.

There are other tactics that can be applied, depending upon each company’s specific situation, i.e., price leader, price follower, etc.

Can you share how you are planning to price your products in a deflationary environment?

RHM  7/22/2010