High quality for low prices, is that even possible?
In the marketing literature, the variables that influence the level of demand are indicated by the 4 P's: Price, Product, Place, Promotion.
Given the number of expressions in store windows, on the internet, at webshops and in leaflets, mainly the factors 'Price' and 'Product' have a major influence on buyers.
"Luxury quality products at bottom prices, high quality at low price, discount, design at outlet prices, and so on." A rational buyer will immediately conclude that the above examples are not realistic. Deep in their hearts, most buyers probably know this. Nevertheless they still are tempted to buy the product or service. Can you also relate to this?
Consumer in the B2B market
Recent marketing research has shown that B2B purchases behave similarly to B2C purchases. In my opinion, that is not surprising as long as a B2B purchase is made by a human being.
After all, the person responsible for a purchase within an organization is also a consumer and will not be able to change the psychological factors that influence his/her behavior depending on whether the purchase is of a business or private nature. Algorithms are not being influenced by psychological factors, people are.
Distinction between Value Chain and Supply Chain organizations
I notice a clear distinction between Value Chain and Supply Chain organizations. The first group clearly has sustainability in mind. Sustainability in the form of: higher continuity, delivery reliability, shorter lead times, compliance with laws and regulations and many other factors. The costs involved are accepted.
The culture within Supply Chain organizations is often known for its continuous search for the lowest costs. This jeopardizes the quality of the components. Marketing psychology works the same in these organizations as for B2C purchases; wanting to buy a lot of quality for low prices.
The fact that quality becomes subordinate is often due to short-term objectives. The costs of recovery actions due to lack of the required quality are not immediately visible but are absolutely present. Also in the B2B world the saying goes: "Everyone who wants to squeeze every last drop out of the Supply Chain will never get a Value Chain".
What is your organization's focus? A lot of quality for (impossible) low prices, or a sustainable business model for the long term?
Monthly Blog Series 2020 - Written by Pincvision's Board of Directors
Blog #1: Regulatory Technology: the view of our CCO on RegTech
Blog #2: How Pincvision evolved itself into a RegTech Company
Blog #3: From entrepreneurial dream to RegTech company
Blog #4: Pincvision and the impact of COVID-19 crisis
Blog #5: Pincvision's Digital Workplace
Blog #6: Sustainable entrepreneurship - check!
Blog #7: International trade continues also in times of crisis
Blog #8: Digital Dexterity in the Digital Workplace
Blog #9: The Compliance Efficiency Paradox
Blog #10: Pandemic-proof because of engagement with customers
Blog #11: Working and thinking from a 'Composable Business' perspective
CEO (Chief Executive Officer) & Founder