Overcoming a Price Difference and Selling on Value

Price DifferenceOne of the hardest issues for a sales management team to overcome is how to differentiate a product from that of a competitor, especially when this company offers their model for a lower price.

When a manager is confronted with this type of issue, they may not be able to lower the price of their product or service. This is a situation where they need to teach their representatives how to sell based on the value of their specific item and company.

It may be difficult for a sales management team to convey the inherent value of some products in relation to a similar item, but one can look to many examples in modern industry.

An example of this type of product differentiation would be the idea of similar but differently priced cars. Comparing a Toyota and a Lexus may serve as an excellent guide to how to imply value through product dependability, according to Barrett Riddleberger, the chief executive officer (CEO) of Resolution Systems, Inc., a sales training and consulting firm.

The Lexus would likely be $30,000 more than the Toyota model, and the two cars may be identical in the body style for the vehicles. Selling this more expensive version has to come down to the specifics, like the features that are included in the higher priced option, the executive noted.

A salesperson in this situation should note that while they seem like exact replicates, the Lexus version contains a wrapped engine. This part is completely encased in plastic and insulation, so that the engine noise is greatly diminished, a selling point for certain customers, Riddleberger noted.

There is a product differentiation that they’ve done in creating the higher-end model, and this is one of the many nuances that can be targeted by a sufficiently-trained representative. When it comes to a market like specific models of different priced cars, it is important to note who the customer is, according to the executive.

“If you’re a salesperson trying to sell a Lexus to a Toyota buyer, the probability of success will be pretty low, noted Riddleberger. “You have to understand that you’re targeting a much smaller niche of people, but they’re going to be the type that will be a buyer.”

The bottom line for salespeople needs to be what makes the product different and to which target audience they are making the pitch to. Understanding the specific market and buying patterns is a tool that a representative must have to be successful, the executive noted.

Selling high-end products to customers with a larger checkbook is a practice that one can teach their representatives and marketing team. People are often willing to pay more for a product if they think it is special or has significant value, Inc.com reported.

While it may be difficult to pitch a Lexus based on the concept of engine noise to someone without the means to buy one, selling to the upper-end market may be easier due to their attraction to exclusivity, according to Riddleberger.

Though the upper class of customers may be the easier pitch, selling quality and value to individuals without the purchasing power of the wealthy market is not something that a representative should shy away from, the executive noted.

“A representative could say the product may cost more but the cost of ownership over time is much lower,” said the executive. “If you buy this competitor’s product at half the price, it’s only going to last you one year whereas our product will last five years.”

“Long term residual value to a company is important and can override a higher initial investment,” Riddleberger concluded.