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7Product-Selling Strategies that

Add Value

Learning ObjectivesLearning Objectives

• Describe positioning as a product-selling strategy

• Explain the cluster of satisfactions concept

• Discuss product-positioning options

• Explain how to sell your product with a price strategy

• Explain how to sell your product with a value-added strategy

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Positioning and DifferentiationPositioning and Differentiation

• Positioning involves:• Those decisions and activities intended to

create and maintain a certain concept of the firm’s product in the customer’s mind

• Differentiation refers to:• Your ability to separate yourself and your

product from that of your competitors• It is the key to building and maintaining a

competitive advantage7-3

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Creating a Value PropositionCreating a Value Proposition

• The set of benefits and values the company promises to deliver to customers to satisfy their needs

• A well-informed customer will usually choose the product that offers the most value

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Porsche Value PropositionPorsche Value Proposition

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The Cluster of The Cluster of Satisfactions ConceptSatisfactions Concept

• Products are problem-solving tools

• People buy products if they fulfill a problem-solving need

• Today’s better educated and more demanding customers are seeking a cluster of satisfactions

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Product-Selling ModelProduct-Selling Model

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FIGURE 7.1

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Product-Positioning OptionsProduct-Positioning Options

• Applies to both new and existing products

• May be necessary to reposition products several times

• Salespeople have an important and expanding role in differentiating products

• Direct and personalized form of communication must be used

• Mass advertising often fails to position a complex product

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Product-Positioning OptionsProduct-Positioning Options

• Position new versus established products

• Position with price strategies

• Position with value added

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Competitive AnalysisCompetitive Analysis

• Value-added product-selling strategy is enhanced when based on a comprehensive analysis of the competitive situation including:• The product• Its attributes• The benefits it offers

• Table 7.1, on the next slide, provides a template for competitive product analysis

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Competitive Analysis WorksheetCompetitive Analysis Worksheet

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TABLE 7.1

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Product Life Cycle StagesProduct Life Cycle Stages

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Selling New versusSelling New versusMature ProductsMature Products

• Nature and extent of each stage in product life cycle determined by:• Product’s perceived advantage over available

substitutes• Product’s benefits and importance of needs

met by product• Full spectrum of competitive activity• Changes in technology, fashion, and/or

demographics

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Product-Selling StrategiesProduct-Selling Strategiesfor Positioningfor Positioning

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FIGURE 7.2

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New and Emerging Products:New and Emerging Products:IntraLinksIntraLinks

• Provides financial services industry with secure transmission of highly confidential information across the Internet

• First sale was to J.P. Morgan for $50,000

• Value proposition focused on:• Faster, more secure document transfer• Translated into improved customer service

and cost savings

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IntraLinksIntraLinks

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Mature and Established Products:Mature and Established Products:New York LifeNew York Life

• 150-year-old insurance company

• Product portfolio recently expanded

• When competing products enter the market, agents adopt new strategies

• Copies products offered by competitors

• Objective is to create in customer’s mind that it is a solid, strong, and solvent company

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New York Life InsuranceNew York Life Insurance

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Selling Products withSelling Products witha Price Strategya Price Strategy

• Pricing decisions must be made at each stage of the life cycle

• Setting price can be a complex process

• First step is to determine pricing objectives:• Some firms set prices to maximize profits

• Others set a market share objective

• Pricing strategies reflect a product’s position in the marketplace

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Transactional Selling Tactics that Transactional Selling Tactics that Emphasize Low PriceEmphasize Low Price

• Quantity discount: lower price for high quantity or dollar amount

• Seasonal discount: price adjusted by time of year

• Promotional allowance: price linked to special promotion or advertising campaign

• Trade/functional discounts: given to wholesalers for special services

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Consequences of Consequences of Low Price TacticsLow Price Tactics

• High/low involvement buyers?• High emotional involvement with brand• Low-involvement buyers focus on price

• Importance of quality?• Role of price-quality relationship

in sale

• Importance of service?• Many buyers, particularly

business-to-business, rank service above absolute price

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E-commerce and PriceE-commerce and Price

• Transaction orientation: online sales persons mostly transaction oriented, little value added

• Buyers often well informed: online buyers visit a number of websites

• Adding value: again, adding value is very important

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Value-Added SellingValue-Added Selling

• Progressive marketers add value with intangibles• Increased service and courtesy• Prompt deliveries, more

innovations

• Value-added approaches yield unique niche and competitive edge

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The Total Product ConceptThe Total Product Concept

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FIGURE 7.3

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Four Product Dimensions:Four Product Dimensions:Generic ProductGeneric Product

• Generic product: basic product you are selling, describes product category (such as hotels, MP3 players, or insurance)

• Example: Every Ritz-Carlton hotel offers guest rooms, meeting rooms, and other basic hotel services.

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Four Product Dimensions:Four Product Dimensions:Expected ProductExpected Product

• Expected product: everything that meets the customer’s minimal expectations beyond generic product

• Example: Every Ritz-Carlton offers not only guest rooms, but the rooms are upscale and luxurious.

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Four Product Dimensions:Four Product Dimensions:Value-Added ProductValue-Added Product

• Value-added product: salesperson offers customers more than they expect

• Example: Every Ritz-Carlton recalls your newspaper preference, wake-up time, and that you require wireless Internet access.

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Four Product Dimensions:Four Product Dimensions:Potential ProductPotential Product

• Potential product: what remains to be done, what is possible, anticipating customers’ future needs

• Example: Every Ritz-Carlton plans to offer complete services for business meetings.

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Ritz-CarltonRitz-Carlton

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Value Creation Investments for . . Value Creation Investments for . . ..

• Transactional buyers• Involves emphasis on eliminating costs,

avoiding delays

• Consultative buyers• Involves custom-tailored solutions to deliver

more real benefits

• Strategic alliance buyers• Requires leveraging the full assets of the

company; investments go well beyond the sales force

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Key Concept Key Concept Discussion QuestionsDiscussion Questions

• Describe positioning as a product-selling strategy

• Discuss product-positioning options

• Explain the cluster of satisfactions concept

7-31Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 7-31

Key Concept Key Concept Discussion QuestionsDiscussion Questions

• Explain how to sell your product with a price strategy

• Explain how to sell your product with a value-added strategy

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