“Dear Stan,
Our company is a relative newcomer to our industry, although the founders are the same people who created the industry thirty odd years ago. The founders decided to re-enter the market with a competitive offering based on superior service and advanced design. Over the last six years, progress has been difficult, but steady. In today’s economy, customers are looking for both performance differentiation and price reductions. It’s my view, as a director of this company, that we have an opportunity to take market share because our product out-performs the competition and we can afford to reduce prices to a point that I don’t believe our competition can match. Our executive in charge of sales doesn’t want to lower prices, however. His reasons are anecdotal and not evidenced. He is not paid on a commission structure. He has significant equity in the company, and we have a profit-based incentive plan.
“I am baffled by the sales executive’s insistence on not using the pricing elasticity in our margins to win more business from an entrenched competitor. What’s going on?
Signed,
D. Lemma”
