\"Soft selling\" occurs when a buyer is skeptical of the quality or usefulness o
ID: 1186364 • Letter: #
Question
"Soft selling" occurs when a buyer is skeptical of the quality or usefulness of a product or service.
For example, suppose you're trying to sell a company a new accounting system that will reduce
costs by 10%. Instead of asking for a price, you oer to them the product in exchange for
50% of their cost savings. Describe the (i) information asymmetry, (ii) the adverse selection
problem, and (iii) why soft selling can serve as a successful signal of the quality or usefulness
of the new accounting system.
Explanation / Answer
well the buyer feels they have nothing to lose, its like your working for commission in the example. you gotta have a good product or be selling it to someone that dosent really need it or at least thinks they dont need it and your gonna prove them wrong, that your product or service would be beneficial to thier bottom line. by doing so takes away the adverse affects or options. its sucessful signal because it can only mean sucess for the pruchaser, and it shows that the seller has confidence in the product/service, that is a sign of sucess to the buyer <<<< that pretty much answers the whole(all parts of the) question.
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