Johnson’s Chen Guides Mercedes-Benz China in Selling Value, Not Price

In her address to more than 2,000 top managers and sales people in Shanghai, Ya-Ru Chen shares principles of trust building and collaborative negotiation

Johnson at Cornell University’s Ya-Ru Chen gave a guest speech to more than 2,000 sales people of Mercedes-Benz at the Mercedes-Benz Arena in Shanghai on February 27, 2012. The 2012 Mercedes-Benz Sales Event is a conference for top management, including the automaker’s China CEO and sales professionals from all its dealerships across China. Chen, the Nicholas H. Noyes Professor of Management, is also co-director of Johnson’s Emerging Markets Institute and faculty director of China Executive Education Programs. Chen is an expert on cross-cultural differences and similarities in employees’ behaviors and attitudes. Her recent work explores how people in different cultures attain, maintain, and experience status.

Chen’s talk, titled “Selling Value as Opposed to Selling Price,” incorporated social psychological principles on trust building and influence, at both individual and network levels, and negotiation, to help inform the luxury automaker  in its continued sales growth in Mainland China. On January 8, 2012, Mercedes-Benz China announced record sales in December 2011, of 23,230 units, as well as record annual sales, with 198,520, a 35 percent increase over the previous year.

Chen defined “value” for the audience as “benefits, less price.”

“The value a company generates for its customers is not solely contingent upon providing a low price,” she said. “Just as important in the equation are the perceived benefits their customers believe they achieve.”

Perceived benefits and price are always compared against what competitors offer across both dimensions, Chen says. So in a competitive market, such as China’s, it is important for a company to have the full knowledge of competitive points of difference. With that knowledge in place as a standard “tool kit,” front-line sales people must identify the needs of each customer, and “personalize” the benefits of the product to that person.  Chen offered the audience techniques for trust building and a framework for collaborative negotiating, to help sellers tailor their approach to the individual customer.