Low Price or Strategic Intelligence by Ariel Pfeffer

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Every time we launch a new product or service, we are trying to reposition it, we dream of having it transforming into a great success. But the doubt that always arises is what to do to make this happen. Offering a lower price than the competitors is usually the most natural option to conquer market-share.  But this is not always the best possible strategy, and it might be worth it to evaluate other alternatives like one of these:

Better Product or Service

It is what companies like Apple and Samsung are doing. The idea is to offer the best possible product. Top of the line technology, exceptional functionalities and permanent innovation. However, it is worth mentioning that this does not come cheap as you are required to set the standards as well as the pricing and be prepared for the market to try undercut you.

Cost Efficiency

This is the famous price war. It is the ability to offer the product as cheap as possible but for better or/and good value. Clear examples of this are Walmart, Forever21 and Groupon.

Segmentation

It is the strategy that aims to the market niches (niche should not be understood as something small).  Rolex, Louis Vuitton and Crystal champagne never aimed to be neither the largest nor the cheapest in their respective markets. They just wanted to reposition themselves as aspirational products for the wealthier classes. Now, look where they are now.

Brand Image

Brand Image, in other words, is to stand out in the mind of the potential consumer based on their reputation, performance and trajectory. Companies like Nike, Harley Davidson and Mercedes Benz are good examples of how they stand out within their own market against their competitors.

Relationship with Consumers

It is a strategy based on direct interpersonal relationships which are called “one on one” and always aiming to total customer satisfaction? Always being one step ahead of the expected and in a personalized way. American department store Nordstrom was one of the pioneers in this strategy. And nowadays, thanks to social networks, many companies are beginning to transit on this road too. For the moment, in a more reactive than pro-active way.

Market Opportunity

That is, having the right product, in the right place, at the right moment. Farmashop and McDonalds are clear examples. Anywhere they are needed, they are present. It goes beyond price and quality. Maybe one never goes to one of these places but you end up there because it is the closest and most convenient.

Cost-Benefit Relationship

In the entire costs structure, there are generally many “fatties” and inefficiencies. But if we manage to polish it with absolute obsession, we would arrive at a very attractive cost-benefit relation. This was one of the keys to the success of Toyota in the USA, which managed to become one of the main brands in the market. People’s perception is that they receive a good product for what they are paying, which does not mean it is cheap.

Financial Position

Finally, there are those who can play in major leagues. They are those companies like General Electric, Exxon or Google, which beyond their own merits, they also base their growth buying other companies of current highlight or potential and without the need to go out raising funds for it. 

If we compare our competitors and we pass them through the filter of each one of these strategies, we will surely find new perspectives and alternatives for our own product or service. Maybe it is not worth it competing based on the same strategy. 

Yes, I (Ariel Pfeffer) already know that this is a simplification and that it is not correct justifying a company’s success on only one attribute. But may the examples serve as a strategy exercise. There is plenty to have fun with and much to think!

Ariel Pfeffer

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