Value Selling vs Price Selling
Recently we were asked to manufacture what we hope turns into repeat production volumes of a family of commercially sold jewelry holders. The customer was purchasing them from India so we weren't overly optomistic. But once we went through the overall objective and design the following items came to light.
1) Parts were being shipped as assembled units and experienced as much as 10% damage in transit.
2) Quality was far from consistent. Since the originals were basically hand cut, there were never two sides that were exactly the same.
3)The materials used were far from 1st grade and therefore the finished product was not up to US customer standards and it was easy to see that at a glance.
4) production lead-time plus shipping time and costs prevented short turn around and consumed cash flow with bulk prepaid inventory volumes.
5) Design changes were really not an easy option nor quick to implement.
6)Parts were pre painted so any new colors compounded the above problems and confused the ability to market a mix of colors in smaller volume increments.
7) The design was not well suited for ease of assembly.
8) Customer reception was limited due to overall quality so sell prices were difficult to increase or promote at the wholesale level.
So we decided there might be an opening for some true value added contributions and persued it.
While these were the 1st production parts, we have since developed an even better design which will ...
A)Allow for "kit shipments", reduce shipping and packaging costs.
B) Allow end user assembly with a "Twist-Lok" assembly feature that will enable the customer to assemble easily.
C) Provide customer color options quickly and easily in single unit volumes or bulk.
D) Free cash flow and operate with less inventory and quicker turn around.
E) Provide much improved consistency and quality opening a potential for wholesale supply.
F) Eliminate incoming freight damage, freight costs, customs, and those types of issues.
G) Eliminate his need to "glue and nail" the parts together on components we make.
H) Overall reduce his "Total cost" while increasing his purchase cost/price per unit.
I) Increase his products percieved value to hopefully increase sales.
J) Increase his margin via reduced handling and overhead costs while increasing mix and volume capability.
So we are continuing on with this project and expect to help this customer broaden his market with new designs.
Just thought I would share these photos and details. We are advocates of "value selling" rather than "price selling" and this is a good example of how it works, when it works. But the supplier must explain the "value" and the customer must be willing to consider the entire scope of their product cost for a win/win.
Our PRT ShopBot is center stage for this products consistentquality, repeatable production, perfect yield, short turn around, and unique design ingredients. The new design simply could not be manufactured by hand or with conventional tools in a competitive environment.
These don't come along evey day but when they do, it's nice to see just how much the ShopBot differentiates us even when facing some of the lowest labor costs in the world.
Enjoy
OOPs forgot photo and cant attach on edit so will add below
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