On March 29, 2017, the FEW Women’s Start-Up Club covered two crucial topics to successfully grow your business: Pricing and Negotiation. Vanessa Oshima, General Manager, Women’s Category, at Nike Japan, first led an engaging discussion on identifying and developing strategies for successful price setting. Tanja Bach, FEW Women’s Start-Up Club Committee Member, then continued the discussion with insights on successful negotiation strategies and best practices.
Pricing – Vanessa Oshima
“Pricing is not about price – it is about worth or value.”
We learned the ins-and out of pricing from Vanessa Oshima. Peppered with personal anecdotes and practical examples, she brought to life the art of pricing. We discussed what affects our pricing decisions as customers. Then, we looked at how we get insights around how to set price, beginning by using the Van Westerndorp pricing method and looked at “premiumziation” – what makes you pay more.
What affects your pricing decision:
Ask your customer/your audience: (Van Westerndorp)
- At what price would you begin to think product is too expensive to consider?
- At what price would you begin to think product is so inexpensive that you would question the quality and not consider it?
- At what price would you begin to think product is getting expensive, but you stillmight consider it?
- At what price would you think product is a bargain – a great buy for the money
Premiumization – what makes you pay more
- Scarcity (time, units, locations)
- Personalization and customization
- Efficacy (health, beauty, lighter, whiter, etc.)
- Purity or Complexity
- Sensory confirmation
- Designed for (adults)
Negotiation – Tanja Bach
“Failing to prepare, is preparing to fail!” – Benjamin Franklin
All of these learnings connect and relate to the next step – negotiation. Tanja Bach briefly introduced the importance of preparing for any negotiation and how information is power. Just like with pricing, it pays to do your research. We often are too focused on us, what we want. Just as with pricing, it is vital to know what the buyer wants as well. Asking for favors is a very short-term selling strategy. Adding value, by stating “what is in it for them” (not you!), will help you form long-term business relationships.
4 Simple Questions to prepare for a negotiation:
- What do you want to achieve from the negotiation?
- What offers or positions are acceptable you?
- Is there anything you need to be aware of? (Issues)
- What would the answers to the above be for your negotiation party?
4 Positions (Source: “Win, Win: How to get a winning result from persuasive negotiations” by Derek Arden)
- BP= Best position: What do you want in an ideal world?
- TP = Target position: What is a softer, more realistic option?
- WAP= Walk away position: When do you leave the table? What is the cost if you walk away?
- ZOPA= Zone of Potential Agreement
- AP= Alternative position: What will you do instead (if all three above do not work?) What will you do with your unused resources?
Information is POWER. The more information you have, the more options you can create. Do your research! If nothing else, have the following answers ready BEFORE you enter a negotiation:
- What are your unique selling points? What makes you special? The key unique selling point is YOU, the way you serve, look after and service the client.
- What are your negotiation variables? (example: information, advice, pricing schemes, services, etc.)
Negotiation “How To Tips”
- Know your audience (again, information is power)
- Get them nodding (one way is to acknowledge their situation)
- Use “AND” not “but” (example of 2 and 3 combo: Yes it is a difficult market right now AND do you think that you need to create new market needs?…..)
- Be aware of your limit (remember the Walk Away Position and don’t be afraid to use it).
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