Cost leadership is a term used to describe a strategic concept that entails creating a competitive advantage in a business/sales market by producing a quality product or service at a better value compared to the competition. Although cost is in the name, value is the major factor in cost leadership. The quality of your product or service may influence your overall value and increase or lower the cost at which you sell your products or services. You don’t always have to sell at the lowest price or match prices, but you should offer competitive prices and value that is beneficial to both the business and the targeted consumer. Most industries are polluted with low-cost and cheap alternatives, so it may be difficult for customers to understand why you don’t lower your price. Your marketing materials and your staff will need to get across to your customers that you offer a better service than your competition. For example, relay to customers that your product is backed by services that add value to the product such as expert advice and dedicated personnel, bundling capabilities, frequent-buyer rewards programs, and education. Base your marketing on understanding the customer’s needs, and adapt and sell toward that point. For instance, a customer who wants to keep costs down is unlikely to select an expensive company to purchase from. For customers seeking quality results, you should focus your sales pitch on your strengths by providing examples, references, and knowledge.
Some methods for influencing customers to purchase include:
- Persuade buyers they will achieve worthwhile results.
- Minimize the perceptionof risk by demonstrating experience, building trust, and inspiring confidence.
- Connect with customers by listening to, and addressing, their needs and desires from your business.
The difficulty of gaining the attention of customers is not whether you are competitive, but how well you know your customers. Trying to please everyone is a difficult task. Your prices will never be cheap enough, and your quality will never satisfy all customers. By focusing your attention on your key customer demographics, you can put together a competitive package at an affordable price for your desired customer group.