B2B Street Fighting Blog

negotiation skills training: expect commoditization pressure

Posted by Marie Dudek Brown on Tue, Jun 26, 2012 @ 09:41 AM

negotiation skills training: expect commoditization pressureNaturally, in any negotiation, it's in the buyer's best interest to at least attempt to commoditize everything you do by saying, "It's all the same, like T-bills or pork bellies...," just like the words "the same thing" in our dread sentence: "I can get the same thing cheaper from someone else."  When the buyer does this, your product is only differentiated by price (hence the term price commoditization).

Buyer arguments in favor of commoditization might sound something like this:

  • "I've got three dozen manufacturers all lining up to sell me the same variation of widget.  Why should I buy yours if it's 10 cents a unit more than the nearest competitor's?"
  • "Forget such added value as special alloys, durability, eco-friendliness and the like.  A widget is a widget, and I'll take the lowest-priced widget you've got, thank you very much!"

To these buyers, the fact that the widget might be half as strong or half as durable or twice as likely to stop "widgeting" when they really need it most is not more important than low price.

Viewing supplier companies side-by-side, to see which provides better wrap-around services and support, etc., often reveals a differential that clearly separates the product offerings.  Value, then, must be mapped against this customer's needs and viewed from the perspective of the total ecosystem.

Now, if you look at the total relationship between your firm and your customer and it is, in fact, exactly the same as your competitor's relationship, then you don't have a negotiation problem, you have a non-existent value proposition.

The bottom line?  Expect buyers to attempt to commoditize; it's what they're paid to do.  And it's the job of the B2B street fighter to combat commoditization at all costs.  You must be able to articulate value; it's the only thing that will take the pressure off of price and keep the deal from being reduced to a price war over a commodity product or service.

 

 

 

 

 

Tags: negotiation skills for sales

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