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| | The Marketing, Channels/Partnership & Sales Execs Network is not currently active and cannot accept new posts | | Role of price promotions in B2B marketing/sales | Views: 1138 | | Mar 01, 2005 6:10 am | | Role of price promotions in B2B marketing/sales | # | 
Srinivas Penumaka | | Hi All,
I want to get your opinions on the role of price promotions in B2B space, especially in enterprise applications. We sell software products to enterprise customers. In order to energize the sales force on certain products, I am implementing promotional programs that include price promotions. However, most enterprise sales guys are used to giving discounts that will help them win a sale. At this time, I see the role of price promotion as something that can raise the awareness and to test the price elasticity of a customer segment.
Any other ideas/opinions are welcome.
Thanks,
-Srinivas Private Reply to Srinivas Penumaka | | Mar 03, 2005 7:11 pm | | re: Role of price promotions in B2B marketing/sales | # |
Peter Donohue | | I come from a product management background in B2B, and as such I always worry about price promotion. I would much rather charge the same price but give more (added services, extended warranty, etc.), rather than use a price promotion.
And on sales discounts - in my mind, this happens too much. It is difficult for sales to sell the value of the product, and when a customer hesitates (for any reason), the easy solution is to lower your price. Just about the only time this should happen is when there is a specific competitor offering a price that you need to go against. If the hesitation is something else, then dropping price should not be the first response, but instead the cause for the hesitation should be addressed directly. Private Reply to Peter Donohue | | Mar 04, 2005 5:02 am | | re: Role of price promotions in B2B marketing/sales | # | 
Douglas Karr | | My job is Database Marketing. Price promotions have honestly never worked with me or my clients. I run my operation very lean, so I require reliable business partners and reliable applications. My clients expect flawless execution.
I believe you run the risk of devaluing yourself and your product with price promotions. It may not seem very different, but I always like working with 'value added' work for my clients. Rather than reducing price, I may offer additional products or services at little/no cost.
I recently left a position where I grew our Direct Marketing budget 4040... a 40% increase with a 40% minimum margin year over year. I didn't do it with price. I did it by relentlessly increasing the quality of our program and data, reducing our contract costs through aggressive negotiation with long-term commitments, and utilizing those funds to re-invest back into our resources. Our customers took notice and we continued to grow. Very few talked about price.
Personally, I only expected price reductions when I brought additional business to the company or signed a long-term contract. Neither were promotions, though.
I might add that my Sales Staff ALWAYS talked about price. We were always more expensive than all of our competition - yet we continued to grow and prosper. If you have Sales Executives who can't sell something for what it is worth, you need new Sales Executives.
It's about the investment your client is making in you and you helping them leverage your solutions so they can get an ROI. Prove it, and they will come.Private Reply to Douglas Karr | | Mar 14, 2005 6:51 pm | | re: Role of price promotions in B2B marketing/sales | # | 
Chen Sun | | >>>At this time, I see the role of price promotion as something that can raise the awareness and to test the price elasticity of a customer segment.
I'm inclined to think this is unlikely to work. As for being able to use the results to determine the price elasticity, this depends on the size of the market--can you get enough customers to measure. With enterprise software, which generally has limited customers, I doubt the practicality of this.
B2B is generally more dependent on timing than on price; whereas B2C can be dependent on price. As mentioned earlier, if the software is devalued through a promotion, a B2B may not buy simply because it feels that it's not getting a good deal at the time it is ready to purchase.
Pricing can be used as a sales strategy, but this should generally be controlled by the sales rep at closing time.
Chen Sun
www.WebAndNet.com
Private Reply to Chen Sun | | Apr 29, 2005 2:48 pm | | re: Role of price promotions in B2B marketing/sales | # | 
Brian Szymanel | | Srinivas
This role is extremely inportant, especially not upseting your customers. Have you thought of using tiered incentives with the use of something that can stretch your dollar such as travel/merchandise premiums? Private Reply to Brian Szymanel | | Apr 29, 2005 10:09 pm | | re: Role of price promotions in B2B marketing/sales | # |
Chris Young | | Price Promotion is the start of a deadly downward spiral.
Remember that besides your pant's price is the easiest thing to drop.
There are far too many instances of companies (ie. Walmart)who have forced suppliers to cut prices so far that they have jeopardized their very existance.
Price competition brings out the "next dumbest" person who lowers the bar for all.
Generally, clients want a supplier who provides a fair service at a fair price.
There was a story in the news recently about a manufacturer in China who took over production of a U.S product line and could not deliver the product cheap enough for Walmart.
Time to fire the client. Never be afraid to walk away from unprofitable work as it will kill you in the long run.
Private Reply to Chris Young | | May 03, 2005 12:18 am | | re: Role of price promotions in B2B marketing/sales | # | 
Poonam Gupta | | Hello Srinivas,
You have got some very good advice here. Here are some of my thoughts:
When you are selling big ticket items, price must be the last thing to be focus on. YOU must do the geographical market research and determine the position of your offerings against competition, market to your nich instead to all those are looking, prove to them the worth of owning your product/service. Make sure sales people are taking the detailed notes of objections. Clear up all the objections and then see if price is still an issue. Even then offer different payment option, smaller packages to be upgraded later, offer additional product/service... meaning that once you have determin the right price for a market, do everything into going on price promotion. Price maybe cut down a little at the very tail end of sale cycle in order to fetch the account ... but I stay away from price promotions.. never worked for me.
Poonam
www.iyka.comPrivate Reply to Poonam Gupta | | May 03, 2005 6:06 am | | re: Role of price promotions in B2B marketing/sales | # |
George Huang | | Hi Srinivas,
For my experiences in sales strategy, you can use price promotion as a "tool" to bring attention of customers. However, you have better to offer a "package" with your price promotion item. Otherwise, it is easy to pull down your company or product image to "cheap". Private Reply to George Huang | | May 03, 2005 10:08 pm | | re: re: Role of price promotions in B2B marketing/sales | # | 
Murray Farrell | | HI Guys,
I agree about the problem of price discounting. In my industry, (electrical safety testing), there are too many people working on price and some have discounted their rate to half of mine. There are also many charging 30 to 50% more than me. I do have dificulty getting extra work. I tell people that I provide workplace safety, not just the tags that imply safety. It is fortunate that I have a good client who provides me with enough work to keep me happy, but there are far too many turkeys scratching around in the dirt stirring up a lot of dust focussed on price. They need to focus on safety, quality and reducing client exposure to risk. All I see these discounters doing is taking on the risk of their clients instead of reducing the risk to the client and themselves.
Hope this helps
MurrayPrivate Reply to Murray Farrell | | |
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