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Problem

A small manufacturer developed a new high-speed packaging system that could be appealing to food-processing firms such as Pillsbury and General Mills. This new packaging system is far more efficient but must be priced 15 percent higher than competitors’ products. Because purchasing managers evaluate the “total cost of ownership” of major purchases, what selling points should the business marketer emphasize to demonstrate the superiority of this new product?

Step-by-step solution

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Step 1/2

When purchasing a product or service, purchasing manager is bound to consider and analyze carefully the invisible and additional costs of the actual purchase price. This possessing of products and services with their complete overall costs by an organization is termed as “Total Cost of Ownership” (TCO).

Step 2/2

Sometimes, business marketer looks to market a product or service to an organization which is expensive comparing to rival products in the market. It definitely needs a systematic and reasonable approach. The following are the selling points a business marketer should emphasize to demonstrate the superiority of a new and expensive product.

• Low acquisition costs:

The business marketers cover the transportation costs and eliminate labor of evaluating suppliers. Minimized delivery charges helps in smooth way of purchasing.

• No possession costs:

The product should be delivered with paid insured charges by the manufacturing companies along with less internal handling costs.

• Minimized usage costs:

Installation works are charged with reasonable rates. Special trainees are provided to educate employees in the usage and field repair.