Case Study - Escaping the Discount Trap
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Introduction: • Discounting is not always good for profitability
• Sales reps should follow strict guidelines
• Approaches customised as per market requirements
• Competitors to be kept at bay
Question 1: Is Augusto's approach right
Answer: • No, it is not a suitable approach
• No scientific proof or evidence was available
• Hospitals reserve the right to study outcomes and make decisions
• Medical equipment pricing is high and often unaffordable for public hospitals such as Santa Casa
• Poor revenue streams from the government
• Clients like Sergio are massively price-sensitive
• Termination of business relationship not feasible
• Better to maintain a healthy transactional relationship
• Meaningful conversation trumps imposing on clients
• Consideration of actual needs and provision of a possible solution
Question 2: Should the company adopt a mix of both strategies
Answer: • Possible to adopt a mix of both strategies but with caution
• Discounts can be offered to the hospitals
• Less control of sales reps over discounts
• Strict regulations of their control over the offered discounts
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Question 3: Should the company abandon " solutions selling " for some of its customers
Answer: • No, it is not a possible solution
• Santa Casa is price-sensitive but a major link with other clients
• Sales depends on outcomes not quantity
• Focus on more effective solutions for patients who actually need them
• Focus on value creation and proposition
• Losing clients like Sergio extremely dangerous
• Competitors will dethrone Bosi e For a
• Loss of market share
Question 4: What can we do in our context , in terms of furthering our solution selling
Answer: • Lucrative market
• CAGR is as high as 7 per cent
• Per capita consumption continues to increase at 10.6 per cent
• Industry is diversified and highly specialised
• Approach should be such that it helps both buyers and the company
• Beneficial outcomes need to be clearly explained
• Buyers must have reasons to not switch to competitors
• Building of a long-lasting relationship with paper companies
• Must not feel like the ideas are being imposed or forced on them
• Initiative must be to help and provide high-quality services
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