The Power Game in general is defined by being in a market
where suppliers are concentrated, so you tend to
find the same competitors over and over.
Customers are concentrated, so you will negotiate with the same
companies multiple times in a series of repeated games.
The Power Game applies to industries such as component
manufacturers in the technology sector,
or heavy equipment manufacturers in heavily concentrated industries such as oil and gas.
To do well in the Power Game from a pricing strategy and model perspective –
to stay in the game – you need to understand the market,
how it works, and how your competitors behave.
So good market intel.
You want to have strategy.
You want to apply game theory concepts to how you negotiate
and play the game over multiple rounds of negotiations.
I can think of two main challenges companies face when
playing the Power Game.
The first one is not succumbing to the pressure of sales targets
and the need we have to win against our competitors.
The second one, especially when there's more supply than demand,
it's then easy to try to take advantage of the situation and
take more value from your customers than you should in
order to build that long standing relationship.
Three things to build and maintain competitive advantage
when playing the Power Game.
First, you want to differentiate yourself against your
competitors at the customer level.
Second, you want to develop good negotiation skills, stay calm
under pressure, and have tools that allow you to see the big picture.
And third, good pricing governance.
It's very easy to get drawn into a price war just to win this deal.