Imagine that your company has put in place a bold new plan for growth. The plan involves opening a new channel to market–selling through big box retailers. This new channel has the potential to allow the company to access new customers and significantly boost revenue. Everyone in your organization is excited, but guess who’s not excited? The strategic accounts that you manage, the national and regional dealers who have been your core channel to market for decades. In fact, they are extremely unhappy with you. The prices that the big box retailers are offering in the marketplace are significantly below what the dealers are presenting. After a few weeks of the new channel launch, your strategic accounts have flooded your voicemail and inbox demanding price concessions.

This is an example of price conflict. Price conflict is a significant misalignment of pricing or pricing expectations in the marketplace. It goes beyond the common pricing challenges that occur when competitors in the market make price adjustments, either up or down, or from the constant pressure by customers on suppliers to reduce price. Price conflict emerges when there’s a fundamental change in how the market operates, and therefore, in pricing dynamics. These situations can be very disruptive to strategic account relationships.

Later in this article we will discuss how to mitigate or resolve price conflict, such as the conflict that emerged in the example, and, in particular, how to do so without having to resort to making price concessions. But first, it’s important to understand when price conflict is likely to occur so that strategic account managers, and their colleagues, can recognize the signs and prepare accordingly.

Velocity®
Vol. 20, Issue 1, 2018
© 2018 Strategic Account Management Association, Inc.