Stuck in a Price War? Use Service Design to Change the Game in B2B Relations

The objective of this article is to illustrate how a service can develop into an important differentiator as strategic and competitive element for medium-sized companies in B2B relations.

Within the building material sector the main competition is on price – the cheaper you can provide a product the more competitive you are. This is a natural business factor and the case for many industries. This situation, however, has proven to retain companies marked positions as the larger companies have the advantages of purchasing with remarkable discounts due to the considerable amount of products, which are bought. As a result larger suppliers can again sell the same products to a lower price at the marked for their customers leaving their small and medium sized competitors in a problematic situation.

The branch is in general hampered by conservatism, but one way out of the sticky situation for a medium sized supplier is through differentiating from its competitors. Service design holds a great potential as a strategic element under such circumstances, however there are two major challenges to confront.
Firstly, in the design of the front stage there is the challenge of economy. The cost of the service must demonstrate more than return of investment – it essential that the service is good for business for the customers to engage in the services.
Secondly, designing a service to be provided and maintained by a company with the self-conception ob being a supplier is challenging due to a cultural factor. In the case the involved plumbing wholesaler found it difficult to step into the service provider role and see the strategic potential of services. In this sense unfolding a service design project is also about facilitating a learning situation as a mean to change the culture.