Top Motivational Speaker Hitesh Ramchandani Spoke about Price War VS Sales Battle
Read Below & Know more about Hitesh.
Sales and pricing are both aimed at increasing revenue. They are so closely intertwined that
people often don't realize the difference between the two. While sales is about achieving the
revenue targets, pricing on other hand aims to maximize current profits. It requires the
business acumen to maintain a delicate balance between them as any change in pricing can
affect bottom-line sales of the commodity.
Anyone who has been in business for long enough understands the delicate relation between
pricing and sales. In a dynamic marketing scenario, fierce competition to increase sales and
profit is a common feature. Here competitors often cut prices in an attempt to increase their
share of the market. But then there is a limit for price cutting. Calculating the return on
investment is a main feature of sales which cannot be compromised.
What Can Trigger a Price War?
A business can use various pricing strategies when selling a product or service. When any
product or services is launched it does have a fixed price. Buyers accept anything that they
perceive as "fair" or "reasonable". Small skirmishes between the competitors begin when one
chooses Product bundling strategy where the company promotes a major product with several
ancillary products. However, a full-blown war ensues when one party initiates a price cut. Such
a price cut invariably triggers a chain reaction in the industry, with competitors usually trying to
outdo each other in cutting prices, leading to a decline in the overall profits of every player in
the industry. Another motive of price cut is to drive out competitors from a market.
However, the strategy price slashing has its own pros and cons. While on one hand the product
available at relatively low cost can be perceived as a better alternative for buyers, it can also
send wrong signals to sensitive buyers. They may doubt the quality of the product or services
available at relatively low prices compared to their counterparts. Companies engaged in price
wars are well aware of the side effects. In order to mitigate these effects, they procure
materials or finished products at a deep discount compared with its rivals.
How to Combat Sales Battle?
Sales get affected most in the price war. When your competitors choose price cut strategy, then
you have two options. Either to follow him and cut your price further to stand in the market or
go for combat selling. Best is to choose the latter which is very suited for a highly competitive
and combative nature of today's global markets.
Successful salespeople know how to meet with the price cuts. In a crowded marketplace
slashing prices to beat competitors can hurt your credibility, brand image, and margin. Best is to
create value for your product or services that outweigh a lower price. Another way is to ensure
time-bound delivery of the product or services to the customers. Always remember a
company’s ability to deliver a product or service in a time bound manner, can make or break a
customer relationship. Offering discounts is another good option to increase sales. Attractive
discounts will quickly draw the attention of the people and drive more traffic to your store.
Improving customer service and experience can be another good way to withstand in the sales
battle. Pre- and post-sale interactions can help in achieving better customer retention. Further,
it can lower operating costs. Such practices, if maintained for extended periods, could
eventually deliver desired result in long run.
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