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Chapter 7
PRODUCT-SELLING STRATEGIES THAT ADD VALUE
Chapters 6 and 7 comprise Part 3, which examines the important role of complete and
accurate product, company, and competitive knowledge in personal selling. Lack of knowledge
in these areas impairs the salesperson’s ability to configure value-added solutions. Part 3 also
describes several value-added selling strategies. Chapter 7 describes product-selling strategies
that add value.
EXTENDED PRESENTATION OUTLINE
Today we are seeing an explosion of specialized products and services. Firms are
differentiating themselves on the basis of quality, price, convenience, economy, and other
factors. To accomplish this goal requires more attention to strategic planning.
I. Product Positioning – In a Competitive Marketplace
A. Positioning involves the decisions, activities, and communication strategies that are
directed toward trying to create and maintain a firm’s intended product concept in the
customer’s mind.
B. Essentials of product positioning
1. Most salespeople use a combination of marketing and sales strategies to position their
products, based on the unique needs of each of their customers.
2. Every salesperson needs a good understanding of the fundamental practices that
contribute to product positioning.
3. In the age of information, salespeople who cannot add value to the products they sell
1. One of the basic tenets of sales and marketing is the principle of product
differentiation.
2. Differentiation refers to your ability to separate yourself and your product from that
of your competitors.
3. Differentiation is the key the key to building and maintaining a competitive
advantage.
4. Companies differentiate their products from competitors on the basis of quality, price,
convenience, economy, or some other factor.
5. Salespeople, who are on the front line interacting with customers, assume one of the
1. A value proposition is the set of benefits and values the salesperson promises to
deliver to customers to satisfy their needs
2. Salespeople have an important responsibility to custom-fit and then attractively
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3. Salespeople must quantify the value proposition
a. Value quantification process raises customers’ comprehension levels as they
1. People buy products if they fulfill a problem-solving need.
2. Satisfactions arise from the product, the company, and the salesperson (see Figure 7.1).
3. The 3D Product Solutions Selling Model illustrates the product, company, and
1. To develop and sell solutions with many competitive “look alike” products,
2. Questions used to engage the customer and identify his or her problem:
3. Cluster of product-selling satisfactions model enables the salesperson to custom-fit
1. Many of today’s information age products are very complex, so product
differentiation must be handled with care.
2. Do not use real or invented technical lingo to impress the buyer.
3. Do not use industry jargon, which may confuse the buyer.
4. Use of lingo or jargon, is often intimidating to the buyer.
1. May be necessary to reposition products several times in their lives.
2. Salespeople have assumed an important and expanding role in differentiating
1. Products have a process known as the product life cycle, which includes first
introduction to the market until it is discontinued.
2. Strategies relating to competition, promotion, pricing, and other factors must be
evaluated and possibly changed.
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3. Nature and extent of each stage in the product life cycle are determined by several
factors, including:
4. As develop a product-selling strategy, consider where the product is positioned in
terms of the life cycle.
5. Sales strategies differ from type of cycle to type of cycle.
B. Selling new and emerging products
1. Selling strategies used during the new and emerging stage (see Figure 7.2) are
designed to:
2. Goal is to build desire for the new product.
3. Salespeople must be resourceful, possess information regarding every aspect of the
1. Characterized by intense competition as new brands enter the market.
2. Customers accept the products, and they are aware of competing products.
3. The relationship strategy is often critical at this stage.
1. Setting the price can be a complex process.
2. Steps in establishing price:
3. Pricing strategies often reflect the product’s position in the product life cycle.
B. Transactional selling tactics that emphasize low price.
1. Some marketers have established a positioning plan that emphasizes low price and the
use of transactional selling tactics.
2. Basic strategy that focuses on meeting competition.
3. Salespeople can alter (lower base price) through the use of discounts.
4. Types of discounts and allowances:
a. Quantity discount—lower price for purchasing in multiple units
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C. Consequences of using low-price tactics
1. Prior to using low-price tactics, sales and marketing should answer these questions:
a. Are you selling to high- or low-involvement buyers?
1. Low-cost products may be sold on the Internet at lower prices.
2. Complex products that need a salesperson’s involvement may be priced higher.
1. Salespeople can add value to their product with one or more intangibles:
a. With improved insights and knowledge of customer needs
2. In the highly competitive marketplace, value-added benefits give the salesperson a
unique niche and a competitive edge.
3. To consistently make sales, salespeople must make and delivering high-value
1. The Value–Added Product–Selling Model (Figure 7.3) is made up
of four “possible” products:
1. Generic product is basic, substantive product that describes only the product
category (example: life insurance, hotel room).
2. Capability of delivering a generic product simply gives the marketer the right to play
in the game, to compete in the marketplace.
3. Generic products, even the lowest-priced ones, often cannot compete with products
that are “expected” by the customer.
4. Very difficult to build customer loyalty if you are selling only the expected product.
5. Customer loyalty more likely to increase when purchase involves a value-added
1. Expected product is everything that represents the customer’s minimal
expectations.
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2. Minimal purchase expectations vary, so salesperson must acquire information
regarding customer’s expectations.
3. When the customer expects more than the generic product, the product can be sold
only if those expectations are met.
4. Determining each customer’s expectations requires the salesperson to:
a. Make observations
5. Top salespersons avoid offering solutions until the needs are clearly spelled out.
6. Very difficult to build customer loyalty if you are selling only the expected product.
E. Value-added product: maximizing your customer’s satisfaction
1. The value–added product exists when salespeople offer customers more than
they expect and may not even know exists.
2. One of most important factors contributing to value-added product is overall quality
1. After value-added product has been developed, the salesperson should begin to
conceptualize potential product.
2. Potential product refers to what may remain to be done, that is, what is possible.
3. Potential product is more likely to be developed by salespeople who are close to their
customers.
1. In most cases, value creation investments during the transactional sale are minimal.
2. Emphasis usually placed on finding ways to eliminate any unnecessary costs
1. A considerable amount of value creation takes place in consultative sales.
2. Higher investments in value creation are permitted because companies need to invest
in developing a good understanding of the customer’s needs and problems.
1. Value creation investments in strategic alliance sales are the highest.
2. Strategic alliances represent the highest form of partnering.
3. Building an alliance always preceded by a careful study of proposed partner.
4. Creating value often requires leveraging full assets of the company, so investments go
well beyond the sales force.
5. Proposed alliances may require investments in new technology, manufacturing
facilities, and warehouses
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END-OF-CHAPTER ACTIVITES
Included in this section are answers to selected end-of-chapter exercises. Answers are
provided for all review questions, application exercises and case problems. Also, a brief
Satisfactions, p. 137: Satisfactions arise from the product itself, from the company that
makes or distributes the product, and from the salesperson that sells and services the product.
3D Product Solutions Selling Model, p. 137: The 3D Product Solutions Selling Model
illustrates the product, company, and salesperson features available to satisfy the customer’s
potential 3D cluster of satisfactions.
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Promotional allowance, p. 142: A promotional allowance is a price reduction given to a
customer who participates in an advertising or a sales support program.
Trade or functional discount, p. 142: Trade or functional discounts cover the cost of services
such as perform credit, storage, or transportation services provided by channel
intermediaries.
Value-Added Product-Selling Model, p. 144: The Value–Added Product–Selling
Model is made up of four “possible” products: the generic product, the expected product, the
value-added product, and the potential product (Figure 7.3).
Generic product, p. 145: The generic product is the basic, substantive product you are
selling.
Expected product, p. 145: The expected product is everything that represents the
customer’s minimal expectations.
Value-added product, p. 145: The value-added product exists when salespeople offer
customers more than they expect and may not even know exists.
Potential product, p. 146: The potential product refers to what may remain to be done, that is,
what is possible.
MyMarketingLab
To complete the problems with the * in your MyLab, go to the EOC Discussion Questions.
ANSWERS TO REVIEW QUESTIONS
7-1 Why has product differentiation become so important in sales and marketing?
7-2 According to Ted Levitt, what is the definition of a product? What satisfactions do customers
want?
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7-3 Explain what is meant by positioning as a product-selling strategy. What is a value
proposition?
positioned.
7-4 Why have salespeople assumed an important role in positioning products?
Salespeople have assumed an important role in positioning products. In our over–
7-5 Briefly describe the influence of electronic commerce on pricing. What types of products are
likely to be sold on the Internet?
7-6 Read the Selling in Action feature titled “How Do Customers Judge Service Quality?” on
page 134. How might this information help a salesperson that wants to adopt the value-added
7-7 What are some of the common ways salespeople add value to the products they sell?
The salesperson adds value to a product or service when he or she discovers what adds value
7-8 What are the four possible products that make up the value-added product-selling concept?
7-9 Describe the difference between a generic product and a value-added product.
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7-10 What is the relationship between value–added selling
strategies and the cluster of product–selling satisfactions?
7-11 Is it true that selling products with a low-price strategy largely ignores customer
satisfaction? Discuss.
Not necessarily. In the case of adjusting price through unbundling, a customer may be able to
save money by not getting a particular part of the product or service. If this particular part is
SUGGESTED ANSWERS FOR APPLICATION EXERCISES
7-12. Most catalogs have a section on the advantages the company offers. Having the students
7-13. It sounds like Tim Downey is more interested in selling profitable options than
7-14. Students will find a page of information with an extensive list of value-added
7-15. There are many different types of financial services representatives in most communities,
ROLE-PLAY EXERCISE
This role-play exercise provides students with practice in developing and presenting a
value proposition. Encourage students to prepare a written list of key benefits they will include in
their value proposition.
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SOLUTION FOR THE CASE PROBLEM
1. It’s very likely that the customer will view all three dimensions of the Product Selling Model
as important. In this case, the hospital is making a major investment, so the Steelcase
2. Selling strategies used during this new and emerging stage should develop a new level of
3. The customer, in this case, was not familiar with the new Steelcase product. The consultative
style of selling establishes a great deal of two-way communication between the salesperson
4. The Steelcase sales team was selling a solution to a problem. The team added value by