Tom’s Note:

Last month, we published an article, “Why Wholesalers Lie,” which examined the issue of contractors and wholesalers who use high price as an objection for not trying a new supplier. One of the supporting features of the article was a poll that indicated price was NOT a top priority.

I had gotten an insightful analysis from marketing expert Filiberto Amati, but I asked him to clarify (he had used a B2C example) with a B2B example. He responded with the following after we had gone to print. I thought his reply, with slight editing, was worth our readers’ attention.

 

 

 

Dear Tom,

I'd be happy to talk to you if you think it is necessary. In the B2B context you describe, the analysis is far less complex, because B2B clients who answer surveys tend to be much more rational and thoughtful in their answers. Therefore, if the "price" does not rank first, then the conclusion is that the price is not the most important aspect. Let's assume that the survey – based on previous consideration about modelling a particular reality – is done correctly, and therefore the right question was asked and we feel comfortable with the conclusion we derive (e.g., purchasing drivers, with price not being the top decision criteria). Then why would a particular player be facing a "value for money" barrier with his clients?

The problem is expectations. Meaning that his customers do not expect the particular client to be able to deliver on their top two drivers, and they end up voicing their discontent in terms of "price.” In other words, the client's brand has an issue. The expectations that it is setting up are not in line with the top drivers of purchase, and they therefore express [it] in terms of price sensitivity, which is rather common with B2B players. Not knowing what the two top drivers are, I would suppose they deal with the product range and the service offered (pre/during/post purchase).  From a B2B customer point of view, claiming "prices are too high" means that the value equation is poor. This could be a mere question of price (all other dimensions at par) or most likely a question of expectation that the product range and/or service are not at par with the competition, hence value is poorer and prices are considered higher. In a nutshell, the player's brand is either over-promising (e.g., making a promise they do not deliver on) or promising aspects that are not relevant to their customer decision process.

 

Kind regards,

Filiberto Amati
Amati & Associates
www.amati-associates.com

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