Sometimes Never Compete on Price
7 days ago
- #pricing
- #business-strategy
- #competition
- Competing on price alone leads to a race to the bottom, harming both companies and customers.
- Successful low-price strategies involve comprehensive, interlocking decisions that create unique trade-offs.
- Examples like Costco, Southwest Airlines, Vanguard, and IKEA show how low prices can be part of a winning strategy when combined with operational innovations.
- These companies made strategic trade-offs that competitors were unwilling to copy, ensuring long-term success.
- Low-price strategies can be profitable from the start without requiring massive external financing.
- Key themes include targeting a subset of the market, innovating in operations, and maintaining long-term vision and values.
- Avoiding price competition requires differentiating on capabilities, user experience, or other unique value propositions.