B2Bridge

With the term 'top-line value' I refer to the additional turn-over or margin a customer could obtain by purchasing a certain product or service. In quite a lot of cases, the top-line advantage of an offering can be substantially higher than the bottom-line advantage, i.e. the cost-reduction advantage to the bottom-line of a company. In those cases, one would expect the top-line advantage to determine the price and the offering with the best top-line advantages to win the competition. That is far from reality, though.

In 'the real world', bottom-line advantages seem to be much easier to sell. I spoke to Prof. Paul Matthyssens and Prof. Koen Vandenbempt from the UAMS Management School last week and told them about this peculiar assessment. They beleive the purchasing habits of customers are the main reason why purchasers do not favor the top-line value of a supplier's offering and tend to buy the best cost-cutter or the lowest price. A couple of years ago, Prof. Derrick Gosselin mentioned another reason during a class on business marketing I attended at the Ghent University. If I recall it well, he said that the effects of cost reductions are more tangible and have a relatively higher yield compared to the efforts to increase the margin through the gain of market share. On the other side, top-line advantages have less guarantees and require a much higher investment for a relatively lower result.

Feel free to add your vision to these ideas.