Who Started The Price War? | Modern Distribution Management

There are literally hundreds of studies, books and seminars on distribution pricing. They all have catchy titles like “How to stop price wars before they start,” “How to win the price war,” and “How to improve your team’s negotiation and price augmenting skills.”

But who started your price war, anyway? On average, when distribution leaders are surveyed, “Who started the price war?”, 85-90 percent come back with this answer: our competitors.

If you have multiple gaps, then the team who is bombing market levels might be your own. Metrics and customer input will help you solve this problem. A key tip: distribution surveys are like gasoline. If your leadership team is open to the results, and you use the knowledge to get more day-to-day leadership on pricing, the survey can help drive your business engine forward.

If your management team is prone to dispute the survey results and still blame the other guy or operations, then the survey will be like throwing gasoline on the pricing fire you have already started. Here are a few key things to look for. If your associates’ answers for question 3 on how they feel about are price competitiveness are basically “we are high,” then you will have many customers who tell them they are high and take advantage of that gap.

I’ve found that distributors who use pricing and margin associate surveys and feedback to improve consistently meet their margin and profit goals. Distributors that don’t get organized feedback – or when the survey is presented don’t use it to develop improvement programs – usually don’t meet their margin and profit goals.

Price wars are real, and it can’t always be the other guy who started them. It might be your team that started the price war. The important takeaway is that you can stop the war with feedback, a plan and looking in the mirror to realize that stopping pricing wars often begins with you.

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Who Started The Price War? | 2018-06-05 | Modern Distribution Management.