Whatever your business strategy, it should be pursued consistently.
If you have the lowest price because that is the value you intend to create, that should be how you compete. You confuse your customers and your employees when you sometimes try to capture more value. You don’t expect to pay more sometimes, and other times, pay less.
If your strategy is to have the very best product, releasing and selling an inferior one damages your strategy. By releasing something that isn’t up to the standard you set, you lose the loyalty and the willingness to pay for something that is supposed to be of a higher quality, one worthy of a higher price.
If your strategy is the best total solution, you don’t have to have the best price or the best product. Instead, you have to consistently deliver greater value through a combination of things designed to deliver greater value than competitive offerings. To execute this strategy you need to consistently create new solutions that match your client’s needs. When you stop collaborating and caring enough to do this work, you have broken your strategy.
There are companies in every vertical that compete using each of these three strategies. It’s their consistency, however, that defines them in their space. You have to be consistently consistent in the execution of your strategy when it comes to differentiation, and when it comes to pricing.
If you choose to compete by providing the lowest price and eliminating other value you might create, execute that strategy consistently and roll up all the targets who need that value. If you choose to create the best product money can buy, then refine your work and improve it, leaving no doubt that your product is better than any alternative. If you compete on the best overall solution, consistently execute that strategy, which means that you price according to the value you create, not what your competitor’s charge.
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Filed under: strategy