3 reasons why startups who are playing on cost leadership will eventually lose
Yes, in this globalized then ever before economy, if cost leadership is your prime strategy, you are headed for a never ending war, for a customer who drops you even faster than a drop of a hat.
A ride back home in the evening. Not sure if Ola will be cheaper or Uber ? Soon to be launched app Cabto will save you all the hassle and get you the best price and best availability from all the cab aggregators ! So if your promise is not the best service but the lowest prices. We know where you will head soon.
3 reasons why cost leadership is not a good idea in today’s world
- There will always be a new player who will enter with a bigger investment and a cheaper product.
- You will never have a base of loyal customers. The biggest asset in a business. A customer whose sole reason is lowest price, will stick to anyone who gives him that !
- You will dissolve other possible equities you could have created. In the war of prices, if you loose the grip on service and customer delight. And boom. The day they find someone better with slightly extra cost, you are out.
Ahem Ahem ! Are the never ending sale providers out there listening ?