Q and A Archives

Peruse a rich archive of questions and answers that ran from 1999 to 2017
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December Suppliers are more frequently being asked, by their customers, to bid in Reverse Auctions. What is a reverse auction?
A: Reverse Auctions are an extension of supply chain management programs with the purpose of driving supplier prices down. They involve an RFP (Request for Proposal) which details the specification of the product to be selected. The supplier is instructed to go on-line to a specific web address, at a specific time, and enter into the bidding process. Many rules are designated for the supplier to remain eligible. Once the bidding starts, the supplier must place a new, lower bid every X minutes (often every 8 -12 minutes), or disqualification will occur. The supplier is only allowed to see his own bid and, after each round, is shown his position in the bidding, never the other bids.
November How detailed should product marketing make the price book in order for sales to utilize it effectively?
A: It has to be detailed enough and proactive enough to deal with future requirements. It must also be comprehensive because it is integral to the activities which determine the sales.

Compare the product option tree against the manufacturing tree and create an array which contains the different ways the customer might want to use your product. Look at your price book. How may of the items in the array are listed in there? Product marketing’s goal should be to cover 90% of these applications. That allows product marketing to leverage its time. When the price book is printed and distributed, it cuts down the calls received from salespeople and customers. If one can anticipate 50-100 customer questions, that saves from 3-300 hours of telephone and email time.

October If you are not recognized as #1 in a market or segment, what is the cardinal rule for positioning your product or company?
A: When you are not first, you want to position your product or company relative to the leader, rather than in place of the leader. A classic example of this is Avis which created a position of #2 in the auto rental business. They made "We try harder" an institution that the public loved.
September “Cloud Computing” is a rapidly growing trend that will have a big impact upon sales and marketing. What is it?
A: “Cloud Computing" refers to many components of technology. Some of the prime ones are software as a service and hardware as a service delivered over the internet. The use of software and additional capacity are not purchased outright but rented as needed and then provided, on demand, from massive data centers. SalesForce.com, Google, Amazon and Oracle are some of the pioneers in the technology.
August Committees are becoming more and more influential in the decisions about supplier products in the semiconductor industry. What is the driving force behind this?
A: As IC manufacturers and OEM suppliers to the semiconductor industry have become larger, and the technology more complex, the cost of making a mistake associated with process and vendor selection has increased dramatically. It is felt that the risks are reduced by involving multi-disciplinary and multi-geographic locations into the decision equation. There is also comfort in spreading the risks (and possibly the blame) across numerous people.
July A tactic often used in negotiations is called a “Trial Balloon” or “Trial Offer”. What does that mean?
A: It is an offer made, in the middle of a negotiation, to test budgets, time constraints, etc., and to lower the expectations of the other party to the negotiation. It is an unrealistically high or low, whichever applies, to find out how far you might be able to push the other party toward your desired outcome.
June In the United States what is illegal about selling your products in an “exclusive deal”?
A: It is illegal for a seller to make a sale conditional upon a buyer's promise not to make purchases from the seller's competitors, if this type of sale may result in substantial lessening of competition. The law also prohibits a seller from making a buyer promise that he will purchase all his requirements of similar goods or services from the seller when this has the same effect on competition.
May There are three elements that are crucial to the probable success of a new product and should be considered early in defining the product. What are they?
A: The key to success is to create a reliable products that meets a defined need in a growing market. Ask yourself "Do I have a reliable product? Do I have a truly defined customer need and does that need exist in a sufficiently large and growing market?" If those conditions can be met, you have a reasonable chance of success. Otherwise, there exists a high probability of failure.
April A “Value Proposition,” properly constructed, should be directed to which of the following: a market, a prospective customer, or individual customer personnel?
A: The correct answer is “all of the above”. A specific product or product line should have a market-level Value Proposition. However, a Value Proposition for a specific customer or potential customer should be tweaked to address the competitive differentiation and issues that are important to that customer. Then as the sale is progressing, portions of the company Value Proposition need to be extracted for specific customer departments/roles.
March How can you, the vendor, best use appointments at expositions (trade shows)?
A: Pre-planned exposition appointments provide excellent opportunities to make inroads with customer/prospect personnel who are critical to your sales progress. The idea is to boost the customer's ego without being patronizing, and give he or she a reason to come to the booth.

Send personal letters or notes to key people in key accounts. The general subject of a personal direct mail piece should focus on your personal invitation to the booth to see new products, to meet key company personnel, and/or to learn of a new technology or application that the customer might be able to use.

Make sure that the letters are personal (not in form letter STYLE). Carefully select the wording, making certain that it clearly conveys an appealing invitation. The most effective letters are done on personal stationary (not company letterhead) that is "different" (e.g. more elegant-looking) even if it has the company logo on top.

If possible, set up specific appointment times. This serves several purposes: 1) It gives the customer an excuse to tell their management that they "must" be at the show on a specific date because they are meeting with you. This is important sometimes for the customer to get approval to attend the show; 2) It also lets your customer feel important enough for you to recognize that their "show" time is valuable – that rather than a casual encounter, you really want to see them; 3) Setting a specific time allows you to make sure that appropriate support personnel (executives, finance people, applications experts, manufacturing, etc.) are in the booth at the appointed time to address any issues that might be of concern to that particular customer.

February For any salesperson that does not have a strong territorial customer base, prospecting becomes an important function. How should he or she go about it?

The key to successful prospecting is to put yourself where the customers are—in their factories, where they congregate, at technical and industry meetings, etc.

Sources of relevant information include anyone with facts: other vendors, former employees, associates of your key contacts, other employees who are friends of yours or friends of friends, customer literature and news announcements, and technical and business periodicals. Also, if you’re a potential customer is listed on one of the U.S. stock exchanges, excellent information can be obtained by going to www.sec.gov and looking up his EDGAR files.

This is the information side of knowing the territory. A sense of the consistency or inconsistency of the information—a sanity check— keeps it in proper perspective. For example, your customer is planning to increase capacity on one of his key product lines, but a newspaper announcement of the company's loss of a major and long anticipated order for the product from that line has just appeared. Check it out!

January When evaluating the price to charge for a product, we often pose the question, “What price is the customer willing to pay?”. Why is this question a wrong one?
A: The real question should center around “communicated value”. In other words, you need to know the real VALUE of your product or service to the customer, and how can you communicate so he sees the value. The true value, which the supplier identified when defining the product or service to be developed, is often not understood by the ultimate customer. The job of the supplier is not to just accept what the customer sees as the value, but to help shape that perception.