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R. Shekar

PVR Rao, the Head of Sales, called Chandrasekhar, the new product manager, to convene a ‘Sales Summit’ to reinforce the need for the salesmen to hold the price line. Rao was vexed at being pulled up by the CEO for the sales team’s inability to command the price they were asked to negotiate. Rao wanted to put a stop to the practice of sales personnel seeking approval for a price deviation or a discount ever so often, reflecting adversely on the EBIDTA mar gins.

In advance preparation for the Sales Summit, Rao advised Chandrasekhar to undertake joint calls with a section of the field sales representatives and comprehend the dynamics that lead to price erosion. Tracing the coordinates of value perception of the seller on the X-axis and the value perception of the buyer on the Y axis, Chandrasekhar came up with four possible outcomes that impacted their pricing policy .

Price leadership characterised a situation where the buyer felt that the price he was being asked to pay more than amply justified the perception of value he/she was getting from it. The customers complimented the salesmen for ‘walking the extra mile’ to deliver something uniquely customised and crafted for them; additionally they provided referrals and entertained no temptation to look at alternative products or company.

Price resistance, in stark contrast to the above, culminated in the salesman having to sing the virtues of the product so loud that the customer began to shy away. Unaware of the adverse effect of their desperation to make the sale, the sales efforts were pushing the customer to a point of unwillingness to buy at any price!

Price volatility signified a variant to the above two with the salesman creating fear, uncertainty and doubt (called FUD technique) invoking dire consequences of interrupted supplies or closure of an attractive discount, that the final price realised was hard to predict until the deal was done.

Price erosion was marked by a lurking doubt about every claim that made it difficult for the two sides to engage in any discussion from the perspective of value.

Chandra mapped the products, the dealers and the salesman into the four coordinates and sought the opinion of Rao as to what he wanted to do at the summit. Now Rao had plenty to think about as to how he was going to tell his ‘star salesmen’ what they had to do differently!

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