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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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