Buyers are not there to make friends. They are there to develop category returns. If you can’t demonstrate how your product will make money for them then get out your wallet and get down on your knees. Assuming you can meet service standards, there are two questions you must answer: why should the buyer take my initiative today? And why should they work with me in the future? Let’s tackle the first.
“I presented it brilliantly, but they still said no, we must be too expensive. How can we get the price down?” I’ve heard it a hundred times.
If you continuously strive to get the price down it becomes harder and harder to show any margin benefit for the buyer while keeping a profit for yourself. Your great idea crashes the category profit because customers lose sales of higher-priced higher-margins lines to sell yours. No buyer will ever say yes unless they’ve got their hands deep in your pockets.
If your product sells, really understand why it sells, what makes it different, and how much people will happily pay for it. If you’ve no difference, find one quick, or accept that price is it. Category management gurus will bleat about how added-value service can differentiate. Well just try doing that as a ‘me-too’ commodity.
Instead look to the higher price at which the product will still sell well, and from which you might promote in self-funding events. Not only do you get some reasonable profit, now it is simple to show how transfer of sales from other lines will build category profits, not damage them.
Amazingly, most initiatives taken forward lack this category calculation though, leaving the buyer with the task. I’m dismayed at suppliers’ reluctance to provide this. “We don’t have the data,” they say. “We can’t be certain.” Make estimates. No one expects a crystal ball, just an honest set of assumptions that you are prepared to share. If you don’t have predicted category profit numbers with you, don’t go.
So the buyer can now see the profit that they will develop by co-operating with you, but it doesn’t mean they will. Controlling the games is just as important don’t believe that you can treat negotiation separately. Sell with negotiation in mind, demonstrate the commercial benefit, but zip up your wallet and keep it close, because buyers will always want more.
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