Sales Growth Strategy
Competing on price can be the "right" strategy if you align your entire organization's processes and practices to achieve the goal of being a low-cost provider. Think of Walmart. They have no frills stores, lower overhead structures, high volumes, lower quality and cost products. Or, you can go the opposite - the higher quality, differentiated route. Here you offer a higher cost to customers who are willing to pay more for a truely differentiated product or service. Think about items you have purchased and ask if you may have paid more than other similar products and why? Do you drive a BMW or Lexus? Why? You could have purchased a Chevy. Do you order a nice bottle of wine at dinner? You could have just had a bottle of two-buck-chuck. You recognized the percieved value and chose to pay more. You can do the same with your business BUT you need to truely offer a product or service that delivers on that promise. The path you choose is up to you.
The Discipline of Market Leaders tells us that there are 3 distinctive competitive strategies:
- Operational Excellence (not just price, but total cost of ownership)
- Product Leadership (innovation)
- Customer Intimacy
The best strategy for your company depends on: a) your target customers; b) existing competitors; and c) your organizational capabilities. Rarely does copying a competitor's strategy lead to market leadership, so its good that you are asking the question!
Some of this depends on the business lifecycle one is in. Early in a life-cycle, when many competitors are involved, then I usually prefer a high touch, high price differentiated solution (IE, product and services not just product) approach to enter and grow a market. Late in the business life-cycle, it may be easier to buy the business by acquiring a competitor and consolidating the competitive landscape with scale and lower pricing of commodities. This is true in distribution (see question above - I used to run the largest independent specialty pharmacy distribution company in the world and we started out with a high-touch model charging for services and then bought competitors to fill in coverage gaps. I also like the Tracy model of 3 competitive dimensions - don't forget - to be a leader you must be leading in 2 and at level in the third to actually lead an industry in this model.
Offering the exact same product to the market does not necessarily come down to pricing competitiveness in order to have a market edge and increase sales and/or profitability.
You need to have the right Go-To-Market strategy, and that
- What are you selling?
- When are you about to sell it?
- Where are you selling?
- Who are you selling your product to?
- Why would customers buy that product from you?
While the first and second W "What and When" would be basically since the premise would be that you are selling the same product at the same time as the competition, the remain 3 Ws are key to ensure your differentiate yourself from the market.
Therefore, if we had to consolidate the approach, a company can leverage two key differentiators in order to make a difference: marketing (Why and Who) and distribution (Where).
- Marketing first: the way you package your product, the messaging you create around it. Understanding your customer personae, gathering data on their habits (we are in the big data era right!), behavioral modes will enable to tailor the product uses for your customers, and even erect a whole new significance and means of the product, creating a strong link (a story) with your brand. Some products are mostly known for the strenght of their brand, because of the brand represents in popular culture and what it provides.
- Using the right media channels to engage your customer base, with the right targetting (and a dynamic one at that) in order to adapt to your customer consumption modes (where they buy your product, how and where they interact with your brand including all the digital touch points...).
All in all, it is a matter of customer engagement strategy. "HoW" to engage relies on marketing, where as the "Where" relies on distribution.
Hope this helps!
To simplify many good and detailed answers to this "age Old" question above, I advise CEOs to answer this very powerful question:
"Tell me in 30 seconds, what are your Unqiue Selling Points (USP's) for your business?"
If they can't answer this or thier answer drones on for minutes with lots of buzzwords and cliches, you found what the problem is and where work needs to be done!
The CEO ( above all ) must be clear, concise, and compelling when asked this question.
That's how any company, large or small, can compete and will be sucessful.
If the answer is muddled or not clear OR not compelling, than why should any customer or prospect, B2C or B2B, care about this company?
Once the CEO has it "spot on" verbally, then put it to paper and make sure it is communicated clearly across all internal and external channels.
Hope this inspires you!
Thanks @Michael and @joe. its of great help but what about distributors ? If there are so many distributors are there and company does not set the price of a product then distributors compete on price and quality is irrelevant in this scenario ? then what strategy a distributor should adapt to increase sales and penetrate into the market to gain more market share. Is it only possible through lower price or is there any other way we can achieve greater market share ?
Thanks @Fred. What I understood from your point is that if you are a distributor and selling something which your competitor is selling on same price then the way to increase your sales and profitability is to give your customer best customer service to differentiate yourself from your competitors.
It's all about differentiation. And, the better those differences align with what customers need and want, the better the product is in a positioned to grow and control the market. Of course, customer demands change and there will always be challengers so, constant innovation has become a must in most areas.
In e-commerce world only your processes' automation and the better customer service in the whole purchase circle, can help you to differentiate from your competitors that sell the same products.
Please look at a household and electronic devices market with similar prices (3-5% difference in price), the same products in all shops.
Who wins? Only with good price, availability, low shipping rates, and a great customer service.
- because it is easy to integrate any warehouse data - stocks, product descriptions, prices etc- from producers (via XML or API)
- a very low level of errors in shared data with distributors, online shops
- it is easy to get good product descriptions, photos, videos
- your have to have a good communication flow to your customers, distributors, shops with different content, via many channels
- you need to monitor prices, especially comparison portals or coupons portals
- your need to build a great mobile experience - responsive design, applications, etc.
- Many American distributors don't participate in it. Some companies even want money for integration with their systems or restrict using their product descriptions or photos. For me, it is a joke nowadays where everything is online.
I notice that producers enter e-Commerce channels by opening their own online stores for B2C and B2B, avoiding distributors and sales channels, and selling on eBay or Amazon directly.
It will change all markets soon. Distributors will be taken over by Amazon or eBay or producers.
Much of the thinking around traditional supply chain needs to change as disruption is eminent. Sales and sales growth will need new thinking, strategies and execution not currently done in the U.S. market.
Health plans and PBMs are already testing or starting new business models as they see the end of long-standing business practices as just one example.
Application of Programmatic Marketing (http://www.stateofdigital.com/what-is-programmatic-marketing-buying-and-advertising/olutions) towards implementing a Real-Time demand response model ( http://ieeexplore.ieee.org/document/5607339/) and general enhanced Digitalisation of services can give distributors an edge over one another. Social Media and Digitalisation Pre-ordering can also boost sales and increase potential buyer network. Likewise enhanced IOT Technology (for instance using digitalised data management/RFID enabled Delivery vans/vehicles that additionally keep records of orders/area mapping and order fluctuations etc in the Supply Chain mimicking IOT and Delivery of Products in the distribution process http://www.supplychaindigital.com/scm/iot-and-delivery-how-pallets-packages-and-products-are-talking-back ) where appropiate can further differentiate one distributor to another and give one an edge. In other words enhanced service and delivery means from distributor to distributor is equally important to differentiation.
Start with a focus on the markets you already know well but then look for the new ones that are of the radar of your competitors. Look for further opportunities connected to your products and enlarge your portfolio with new complementary offers. Adopt new channels of distributions and sell the way your customers want. Create a unique experience for them. Provide your customers with good pre and post sales services. Obviously you could be aggressive with the pricing too.
(answering in context of a distributor who can't differentiate on price).
Two main ideas come to mind:
1) Focus on other satisfying other decision criteria, such as quality, availability, warranty, bundling with other related products/services, packaging, etc.
If we're dealing with something other than the most mature commodity, there should be aspects of buying or experience (use) which the distributor can gain some advantage or entry point. Perhaps employ 'jobs to be done' analysis, to identify what outcome or purpose is being satisfied by a user (buyer) in acquiring the product from the distributor.
2) Also, look at ways to increase demand and/or shift the nature of buying. Marketing which promotes additional or unique value could be effective, if the company clearly can hit on some trigger for raising the volume desired, or specific considerations in buying.
Perhaps a distributor can't control price, but they could divert demand from other secondary distributors, or the main manufacturer (think about the overall value and supply chains).
One often undervalued opportunity lies in services -- and especially around data/reporting or information, given technology possibilities. Extending the value of a distributor's service beyond just providing a physical product.
Connect your product that is deeply aligned with a necessary truth and a story that intrinsically connects with the customer at a deep spiritual level. This increases an authentic connection that is not based on manipulation, but rather true servitude. Align your product to be a healing agent to the consumer, that is vital.
Michael's points resonated with some recent thoughts and discussions i have had.
Distributors tend to distribute more than 1 brand/category, which creates an advantage when bundling to market.
Availability, especially across new channels (physical & online) feels is shaping up to be the next big platform for SMEs to get scale market presence - associated costs to list products on a retailer's or client's online catalog are significantly lower than physical availability on their shelves
If your product is in a competitive marketplace the way to differentiate is with service. Look at water treatment companies. Many years ago they were water treatment chemical companies just selling on price. There was only one way that market was going. To avoid catastrophe, the key players introduced service into their model and now most players offer fully serviced chemical packages, where they run water treatment processes for clients.
Your sales people, their knowledge, and their ability to understand the situation facing the prospect, are essential for differentiating your people and your company when all things are equal such as product and pricing. The people a prospect interacts with either offer understanding, knowledge, and their own valued participation in conversations, that contribute to winning over the prospect.
It comes down to situational understanding, and conversational strategies to show your ideas help clients.
Attracting consumers and creating consumer Interest in the product to generate market demand is sales Strategy.Sales growth strategy means consumer will contact the retailers for the product, the retailer then contact the whole sellers and whole sellers then contact the Manufacturers for the products. With increased product demand, the manufacturers will pull from the supply chain, making retailers to contact the suppliers and distributors and the suppliers and distributors will contact the companies for the product. Sales Strategy is to convince the customer to try out the new product and attract the customers towards your product, forcing the consumers to reject the competing products, creating customer loyalty and building strong customer relationships.
12 months ago
Understanding the prospective customer's path to purchase and channels of purchase are strong requirements. If you examine the prime pathways by which a prospect discovers your product or service does it include Google searches? Facebook comments? Or is your product (and in some instances services) hosted by Amazon where the bulk of your sales come from. Understand the process a customer follows when looking for and making the buying decisions to better prepare for selling, servicing and supporting your prospective and current loyal customers.
I found this thread really interesting - thank you for starting it. The comments resonated with me, particularly because I had been thinking about something similar recently. If you're interested, the book that I've found to be most useful in creating a framework that helps think through this as well as explain it to my peers so as to secure buy-in is Kellogg on Marketing. It's dry, but super helpful. Enjoy.
I think that people started to treat B2B sales like B2C and number of follow ups have to rise ( typical number of visits before a purchase for home related products is 7-10). The new generation of employees is entering the market. The B2B solutions are very similar and the market entrance is easier than 10 years ago. Recently I had a client that asked me to help him to choose a project management tool because he did many research and talks to sellers without the result. He was overwhelmed. I also noticed that there are a few good application building tools that can create any application you need in a fast and reliable manner. I think that customers learn and try to choose the best option. Many of them do not answer emails because they think it is ok, nothing happened, it is for free. I suggest to start using webinars or online conferences, marketing automation techniques. It will help a lot to understand the funnel and the sales process. You can get your prospects social media information, PR information, directly to your CRM. More data will help to understand the root cause.
Competing on price is a slippery slope for both the solution provider, and the prospective customer. Competing on value is always a more solid position, but requires that sales do a great job with understanding the situation and the ramifications of choosing one solution over another. If price is the most valued lever in the decision making process, perhaps your company and its cost structure are just not competitive enough. If your company has a cost advantage through efficiencies or productivity, then you have a chance to offer more value for the same amount of select parameters, and should be emphasized as a differentiator in the value propositions used.
better quality materials will raise customer satisfaction to pay higher cost even in competition is best more sales business strategy.
8 months ago
Manufacturing quality materials continuously for sale in market with required advertising attract customers for their more satisfaction even paying higher costs in spite of sale competition is best strategy for sales growth.
8 months ago
Company should adopt customer awareness through advertisement as a strategy for more sales when there is competitive market with same quality product which have equal price also.
8 months ago
Programmatic ad buying platforms allow purchasing and selling such types of digital adverts, as:application
search, video, display, mobile, social ads. There https://polus.media/programmatic-advertising/ you could find all advantages using programmatic ads
Service can be your biggest differentiator. Every interaction with your company should be memorable, in a good way. Exceed people's expectations when possible. Make your customers' lives easier, deliver solutions faster, help them solve problems they didn't know they had.
Make sure every employee knows why your company exists, what the values are, how to treat people, and why it matters.
Stop competing in the "red ocean", which is the current market. If the market is as saturated as you are suggesting, the economics will be sustainable and predictable. It's very difficult to create your value proposition, differentiation and competitive advantage in such a market.
Instead, start challenging paradigms and conventional wisdom to determine how your organization can pivot its capabilities within 1-2-3 standard deviations to capture new market share in "white space" or "blue oceans". These would tangential markets of which your company would be pioneering and be first to market. What would be a concomitant or substitutable product/service that your organization could offer?