Emphasize value over price

Demonstrate value or settle for piece pricing

By Justin Aschenbrenner -- Industrial Distribution, 12/1/2004

If you want a quick lesson on what drives your customers to buy your array of products, walk down the hall to your own purchasing department or the desk of your purchasing agent.

You'll probably be enlightened that products are bought based on a multitude of reasons, ranging from the delivery schedule to the reputation of the supplier. But, too often price is the major factor.

What happened to value? Buyers who are pressured by piece pricing often are not informed about the true value of the product in terms of the cost of ownership and what is behind the cost of ownership. Plant engineers and maintenance managers feel the same pressure.

They need to hear it from us. Piece pricing versus value is a shared issue for product manufacturers and their distributor partners, and it all begins with the manufacturer.

In the power transmission industry, for example, distributors and buyers need to know how a low-priced belt may increase maintenance and frequent parts replacement costs, and eliminate energy savings. These are typical costs of ownership that are often overlooked, and not demonstrated by the distributor and manufacturer.

Also, in terms of true value, what is behind the cost of ownership? For most products, the value is support. Do you and your customers have support from the manufacturer?

Our distributors can count on the industry's largest dedicated power transmission field sales force that is backed by talented and experienced product application engineers. We've also assigned engineers to offices where we have our major distributors and customers in the eastern areas of the country. The various sales groups and their distributors (and engineers, when necessary) are constantly troubleshooting customers' drive problems. A hotline has been set up with customer service reps that are certified to provide two-point drive design solutions.

Another example of product value is the new Powered System of Savings program, where a distributor and a field sales person team up to perform an in-plant survey designed to reveal operational inefficiencies and other cost factors for any power transmission or motion control system. Follow-up reports show the customer how operational costs can be reduced and productivity can be enhanced. Annual cost savings can be guaranteed on any relevant belt drive product or product grouping if its recommendations are implemented properly.

In addition, distributors and field sales groups are provided with a 20-piece tool kit that detects drive problems ranging from alignment to tensioning. The kit concept is both a value and a service because it allows the distributor and Gates to correct a customer's drive system problems and prescribe a solution.

Unless you are selling a one-of-a-kind product, the notion of adding value is not new. But, competition forces us to constantly develop new products and add more value to the existing products we manufacture and sell.

When we—the distributor-manufacturer team—demonstrate the value of our products we take the pressure of piece pricing off our buyers.