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Launch Pricing Airliner Discount Penetration Dumping

Pricing our shiny new product is not something many salesteams get to set.

Which, I hear many a seller sigh, is why so many new releases fall short of expectations.

Marketing departments feel they exist to carry out this procedure.

Of the myriad pricing strategies – and a library of advice is available on this topic – Cost-plus and Competition angles reign. I know this because I often play a workshoppy quick quiz with Sales Management to name pricing policies. They invariably answer first with what gives a profit and what’s everyone else charging often as being the twin main measures that spring to mind.

This week a commercial ‘turbulent feud‘ has broken through MSM accusing the Canadians of unfair state aid to their airplane maker, Bombardier. President Trump doesn’t like it. Boeing – no stranger to such machinations with their nemesis, Airbus – don’t like it. And the Northern Irish with it dragging their biggest employer towards risk through Boeing hypocrisy don’t like the fuss either.

Boeing reckon Bombardier are “dumping” new planes. They’ve accused them of selling them for appreciably less than it costs to produce them. Practically giving them away to nab a vital market foothold.

For their part, Bombardier respond saying that “Launch Pricing”, which involves initial purchase incentive through “discounting” to achieve take up for new models, is “normal course” for their sector.

Fascinating all round.

When you delve beneath the counter-claims, you find reports of deals won through what was labelled “aggressive” prices. Fortune reported initial client Delta got “a whopping two-thirds discount”. This is millions of dollars, according to them, a hit of at least half-a-billion. The other gaining signatory, Lufthansa, seemed happy to add, “As the launch customer you get a very interesting price”.

So. New product sales through launch pricing. Sound attractive?

If funded to the tune of these jets and their type of “repayable launch aid”, not many salespeople would object, I fancy.

Your marketplace is likely not as “inefficient” as this one. So it surely is an unsustainable strategy in solution selling. Even dressed up under its more traditional label, Penetration Pricing.

The big issue is usually how on earth – when like here with aero, market players all seem to openly talk – do you win business post-launch?

Where a client may well work in collaboration with you to help develop (and refine) your new product, then a different price approach can understandably kick in. One which rewards their shared effort. This is commonplace on tech-sided Beta Customer programs for instance.

But trying to wantonly buy fresh market share in this way seems a crazy call to me.

Your product has a value. It must fairly command it. And be shown to be worth it.

Whenever I’m involved in a launch program, I counsel heavily against the use of ‘discount’ to get going and ‘buy’ market presence.

How’s your latest launch show on that scale?

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Category: new products

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