Business Corner
STRATEGIES & ANALYSIS
BY PHIL PHILLIPS, PHD
CONTRIBUTING EDITOR
PHILLIPS@CHEMARKCONSULTING.NET
System development...where value
selling begins: Part 1
The first
of a three-part series
exploring
the topic of
system
selling.
In the May 2010 Business Corner column, we commented on new value selling tech- niques including Winning on Value vs.
Losing on Price-Competing Successfully in a
Me-Too Marketplace. As an after thought, I
felt that a return to the basics, upon the shoulders of which Value-Selling is supported,
would make sense.
I believe I’ve read just about every book
available over the past 20-plus years regarding methods to improve profitable sales batting averages of success. At least it seems
that I have.
Do you agree with the following statement?
“There is nothing more vulnerable than a
naked commodity product: naked to its cus-
tomers and its competitors because it has
been stripped of the unique performance
benefits it once enjoyed.”
A commodity is vulnerable to three inter-
related business elements:
• Price/margin reduction;
• Substitution; and
• Losing a customer while acquiring a competitor.
Since a commodity product offering can no
longer provide itself with protective barriers
of uniquely advantageous performance, it
must be able to add value to its users in
other ways if it is to survive at all.
One of the most popular ways to add value is
to reduce price. The customer pays less for the
same value. Therefore, the value is enhanced.
A second method to add value is to maintain
price but give more in exchange for that price.
For example, free services, like better terms
conditions, a larger inventory float, deals and
discounts. The customer pays the same price
but receives a greater perceived value.
I would urge you to consider a third
method of value enhancement. I would not
suggest that all so-called commodities can be
converted, but I do know that many can be
converted to higher value to both your customers as well as to your own company. What
I’m referring to is a method of wrapping the
‘commodity’ is a system.
A Commodity System is a package composed
of a commodity product and one or more other
products and related services. It is then sold as
a single unit whose price is based on the system’s ability to add value that the commodity
product alone cannot offer. This value is the economic effect of solving a customer’s cost problem by reducing the cost or solving a customer’s
revenue problem by increasing sales.
A commodity product that is packaged in a
system undergoes a conversion. It takes on
some of the most desirable selling attributes of
