B2B Marketing, the 4 P’s and Social Media – Price

 

 

Price

The fourth in a series of blogs that focus on today’s B2B marketing environment, in which the traditional 4 P’s (Product, Place, Promotion and Price) are being influenced by social (digital) media and activities.

Price and pricing is probably the most important of the 4 P’s.  The price of a product conveys where it is positioned in a competitive array; it is used by the buyer to determine the ROI of the product and features; it sets the approval level and therefore the selling level in a buyer’s company; and it influences the margins in distribution channels.

Too high a price and you may not be considered.  Too low a price and you might be perceived as not having all the necessary features.  Once set, it is very difficult to raise a price.  On the other hand, if a company is always discounting its price, its credibility is at stake. 

The price of a product also defines the Value Proposition to the buyer.  He/she evaluates the totality of the goods and services offered by the seller, in both the short and long term, and subtracts the cost to derive the Value Proposition. (VP = benefits – cost)  If the Value Proposition of your product is greater than your competitors, you win the sale.

The question of putting a price list on the web site is answered by…it depends.  If a B2B company is selling a well known and long established commodity, then putting the pricing on the web site may enhance the buying process.  If pricing is put on the web site, it is critical that the entry is monitored and updated on a regular basis.  There are stories of lost sales due to web site pricing that was not updated.

If the product has unique features that are fully differentiated from the competition, putting the pricing on the web site may be giving away too much information.  One should assume that once a price is placed on a web site it will be and/or has been seen by both buyers and the competition.  Any first mover advantage, say in lowering prices, is quickly lost.

As noted in earlier posts, approximately 60% of the sales process is completed before a sales rep is contacted.  The 40% of the remaining sales process is where the salesperson earns his pay; by reinforcing or correcting what the potential customer thinks they know, by providing technical input if required, and by “costing out” i.e., pricing the sale.  This may be then followed by a series of changes and/or negotiations before the sale is closed.  This last 40%, where discussions and negotiations around pricing are a big part of the selling process, is the purview of sales.  Generally this is does not involve social media or marketing.

Bottom line, pricing is very important.  The joining of social media and pricing depends upon the product(s) a company sells and the markets in which they compete.  It must be judged on a product-by-product basis, with Marketing taking guidance from the Management team.

 

RHM  3/5/2014 

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