Article 28 :

Marketing and selling in tough economic conditions:

How to sell when market is price-conscious

Series by: Prasanna Perera Marketing and Management Consultant, Chartered Marketer, CIM U.K.

Sri Lankans are price conscious for obvious reasons. Talk to any company in Sri Lanka and they will tell that consumers are becoming more and more price conscious. These company sales persons come back with the same questions - Dealers are requesting higher discounts and higher credit terms? The product off take has slowed down because of dwindling consumer incomes. Against this backdrop, it would be prudent to address the issue of selling in very price sensitive markets.

To sell at the lowest price would be any salesman's dream. Then, do we need salesman to sell at the lowest price? Competent salesman would be skilled enough to achieve sales by reducing the level of price consciousness. To do this, price should be kept away from dominating the customers mind. What are the techniques available?

Mention the price of the product at the right time, which is as late as possible! Relate the price to the value which the customer receives in return. Consider all price objections as an invitation for information.

Another logical method for playing down the importance of price, is to justify the price - both high price and low price. High prices need to be justified because people would like to avoid spending too much money. Low prices need to be justified, because people do not want to get inferior quality. Most customers tend to suspect a surprisingly low price as evidence that the seller is trying to get rid of a poor quality product or one that does not exactly fit the market.

Price comparison

Price comparison is another technique that can be adopted. A high priced product seems less expensive when it can be compared with a product that is much higher in price. The product need not necessarily be compared with something directly substitutable; the psychology works even if there is only a significant relation between the articles.

The comparison can be introduced by demonstration as well. A shaving system for instance, costs more than a disposable razor, but if a customer tries out both, he will invariably want the shaving system and will buy it if he can afford it. Take the example of a hydraulic jack. It costs more than a cheap mechanical jack but once a customer tries out a hydraulic jack, he will buy it if he can afford it.

Whenever price is mentioned in the sales presentation, also mention value. Never merely state the price. Make it a practice to follow up price statements, with a statement about the value of the product offered. Better still, talk value before and after mentioning price. Therefore, the best sequence is first value, then price, then value again.

Salespersons have a better chance in negotiating price, if he initiates the sale, rather than when acting as a mere order taker. If the customer knows what he wants and orders, price is a big element in the decision and he is on top. But if the salesman has determined his customer's needs or can sell the benefits of his offer to the customer, the relationship is more balanced. This difference emphasises the importance of truly creative selling and how it can help in avoiding/ minimising price based objections.

Sales negotiations

Another important aspect for salesman to keep in mind is that the more complex and special a product is, the less important is the price. Salesman who market such products, must keep this facet in their minds, when conducting sales negotiations. Specially made products, strengthen the salesman's power, whilst standardised ones weaken his price bargaining position.

In situations where high price products have to be sold 'compensation' for a high price is a good technique to employ. The customers prices objections should be dealt with by presenting all the compensatory factors. Salesman would do well to study the product being sold, to find every aspect of it that compensates for its high price. These compensating factors should be emphasised to the customer, before price based objections are raised.

Four basic rules for diverting attention from price

Make every effort to market a product at a price that the market can afford. A good understanding of the market and customer buying behaviour is essential. Profit targets should be aligned to market sentiments and not to internal cost requirements only.

Secondly, consciously lead the customer to concentrate his attention on the value he receives for his money, when making a purchase.

This value-for-money perspective, minimises the 'price only' preoccupation of customers.

Marketing a product as something desirable and useful to a customer is another rule to keep out price. The desirability of a product can be enhanced through the features and related benefits.

Finally, a range of proper psychological techniques can be adopted to divert attention from price. Some of these techniques were highlighted in the earlier part of this article and hence, would not be repeated.

Sales persons have the tendency to bury themselves in price (price obsession). To keep price in proper perspective in the sales negotiation, the salesman himself must not be oversensitive to price. Sales people often complain that customers worry too much on price, not realising that it is they who are hypnotized by their prices and thus lead the customer's mind to that very subject. A more positive approach consists of stressing the profitable and money saving characteristics of the product.

In this brief article, I have attempted to share some techniques on how to reduce the price related dimensions in selling. Price is inevitably an important component in selling a product but there must not be a case of highlighting the inevitable unnecessarily.

Salesman would do well to realise that they dig their own graves, by being too obsessed with prices. Instead, salesman should improve their creative selling skills and remember that selling is not selling at the lowest price.

You do not need professional salesman to sell a product at the lowest price! What is required are salesman, who are professional and understand the basic principles of demand/supply management.